Protest Resources

Yes, it happens more than you would think. Texas’ Constitution prohibits discriminatory practices in assessing taxes. For example, suppose your recently purchased property is assessed at its purchase price but others in the subdivision are not affected.  You may be appraised unequally even at market. (1)

Conversely suppose a recent sale (or sales) in your neighborhood disproportionately affects your property resulting in a higher assessment than your neighbors’.  Or suppose yours is assessed at market while others are assessed at less than market.

One of the least understood arguments for a reduction is Inequality of Appraisal (also sometimes call equal and uniform taxation).  When successful it always results in a value below market.  Inequality is specified in the Tax Code and commonly used for newly acquired commercial properties.  But it is often not used effectively by those protesting residential values even though it applies equally there.

Many agents don’t know how to pursue Inequality because it’s complicated.   At Property Tax Protest we do it successfully more often than not.  And, of course, if there’s no reduction there’s no fee.

There are three criteria for relief under Inequality:

• the appraisal ratio of the property exceeds by at least 10 percent the median level of appraisal of a reasonable and representative sample of other properties in the appraisal district, or
• the appraisal ratio of the property exceeds by at least 10 percent the median level of appraisal of a sample of properties in the appraisal district consisting of a reasonable number of other properties similarly situated to, or of the same general kind or character as, the property subject to the appeal; or
• the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted. 

Two of the three criteria use ratios and one uses value.  All require judgments that must be supported by data; you can’t just make the claim without facts.  These are complex arguments that are over the heads of most homeowners and many agents.  

The law is weighted in your favor; if you prevail on only one of the criteria the decision goes in your favor.  Also, the Texas Supreme Court has ruled that value determined by Inequality prevails over value determined by market (2).  Thus, Inequality results in a taxable value below market.

Why bother?  Because left unprotested, your most recent value can become the floor for subsequent increases.  A successful protest this year raises the district’s bar for next year (3).  We can save you money for years to come by using all the tools available.

(1) “…it is unfair, and constitutionally prohibited, to require one taxpayer to pay a tax based on market values if other taxpayers are paying a rate that is lower than the market value of their properties.” Texas Supreme Court, Weingarten Realty v. Harris County Appraisal District.

‍
(2) “If a conflict exists between taxation at market value and equal and uniform taxation, equal and uniform taxation must prevail.”  Ibid.

‍
(3)    [Effective January 1, 2020] . . . In the next tax year in which the property is appraised (following a successful protest), the chief appraiser may not increase the appraised value of the property unless the increase by the chief appraiser is reasonably supported by clear and convincing evidence when all of the reliable and probative evidence in the record is considered as a whole. . . . The burden of proof is on the chief appraiser to support an increase in the appraised value of property under the circumstances described by this subsection.  Texas Property Tax Code, Section 23.01(e)

What Are My Chances of Success:In recent years about 60% of the homeowners who protested their values obtained reductions.  The others include many whose values were already at or below market – and therefore had no case to present to the Appraisal Review Board — and many who failed to appear at their scheduled hearings.  Those who filed a protest and actually appeared with good data had a higher success rate than those who had no supporting data.  With good data and a professional approach to the ARB your chances of success should be closer to 90%.To sign up, simply return these two Documents. Send no money.

Local taxing authorities (cities, counties, hospital districts, school districts) must publish certain information and schedule public hearings before approving a tax rate.  Senate Bill 2 currently (Spring 2017) being debated in the Legislature will affect how that unfolds.  Here’s a primer:

Proposed Tax Rate:

This is the rate taxing authorities estimate they need to cover their budgeted expenses for the following year.  If taxable values increase year to year, a lower rate can generate the same revenues but if the rate is not reduced the unchanged rate can generate increased revenues from higher taxable values.  Taxing authorities can then claim they didn’t increase taxes.  (They didn’t; the appraisal districts increased values.)

Effective Tax Rate:

This is the rate that would generate the same revenue as last year.  If appraisal districts have increased taxable values year to year then a lower Effective Tax Rate will generate the same revenues as in the prior year.

Rollback Tax Rate:

A taxing authority may not exceed the Rollback Tax Rate – currently 8% but the Legislature is currently (March 2017) considering a reduction to 4% — which is the amount by which total tax revenues – not rates — can exceed the prior year’s revenues without allowing its voters to petition for a lower rate.  All taxing districts are affected except school districts which must hold an automatic rollback tax rate election in November if the rollback rate is exceeded.  For the others – city, county, hospital district, etc. – a rollback petition is required and the rollback election takes place in a month other than November, when most voters turn out to vote.

Senate Bill 2This bill would reduce the Rollback Tax Rate to 4% and would automatically trigger a rollback election in November.  The effect on local taxing authorities would be immediate and would encourage them to keep total tax collection increases below 4%.  In a market of increasing values this means a lower tax rate applied to an increased tax base.But would limiting total tax collection increases to 4% benefit taxpayers?  In a growing market like DFW, where population growth continues to put demands on local authorities, a 4% cap on tax collections could result in less services just when more services are required.  As Texas continues to attract people moving from other states municipal and county services may be unable to keep pace.  That’s why local governments are almost unanimously opposed to the 4% cap in SB 2.The opposing argument is that if demand for services requires total tax revenues to increase more than 4% then taxing authorities should be required to justify the increase to their voters.According to the Texas Comptroller’s Biennial Property Tax Report school taxes generate 54 percent of local property taxes statewide.  So SB 2 addresses less than half the property taxes paid by Texas owners.To sign up, simply return these two Documents. Send no money.

You qualify for the General Residential Exemption if (1) you owned the property on January 1; (2) you occupied it as your principal residence on January 1; and (3) you or your spouse have not claimed a residence homestead exemption on any other property.You qualify for the Over 65 Exemption if you are 65 years of age or older. This exemption also includes a school tax limitation, or ceiling. You can’t claim a disability exemption if you claim the Over 65 exemption. You must apply within one year of the date you acquired the home, if you were 65 or older when you acquired and occupied the home as your principal residence, or within one year of the date of your 65th birthday, if you already owned the home and turned 65 after January 1.You qualify for the Disability Exemption if you qualify for the homestead exemption and on January 1 you were under a disability for the purposes of payment of disability benefits under the federal Old Age, Survivor’s and Disability Insurance Act or you met the definition of disabled in that Act. You cannot claim an over 65 exemption if you claim this exemption. This exemption does not include a school tax limitation.You qualify for the Over 55 Surviving Spouse of a Person Who Received the Over 65 Exemption if (1) you were 55 years of age or older on the date your spouse died and (2) your deceased spouse was receiving the over 65 exemptions on this residence homestead or would have applied and qualified for the exemptions in the year of the spouse’s death.To sign up, simply return these two Documents. Send no money.

Neighborhood, Class and Effective Age are criteria that resonate with the Appraisal Review Board.  A Realtor’s Comparative Market Analysis (CMA) doesn’t recognize them the way the ARB does.

Neighborhood

Your neighborhood is one of the important elements considered  in evaluating your property.  It may or may not be the same as your subdivision or what MLS considers to be your neighborhood.A Neighborhood may be defined as a portion of a large community, or as an entire community, in which there is a homogeneous group which may consist of several subdivisions or part of just one subdivision.  Differences in Neighborhoods generally are quite obvious and often coincide with natural barriers, major streets, subdivision lines, housing styles, city limits or school district lines.School district and city lines may divide seemingly homogeneous Neighborhoods.  Physical characteristics may do the same.  For example, a creek side lot will be more valuable than a lot facing it on the other side of the street.  A lot with a view may be more valuable than one without the view.  Usually, these differences are also reflected in the price of the land, which is why we provide land value per square foot in our detail reports of comparable sales and assessments.We analyze your property by your Neighborhood (as it is defined by your CAD) and not just by what MLS considers to be comparable properties.But ultimately the value  of your property will not depend as much on the Neighborhood of which it is a part as on the individual characteristics of the home.  These include Class, Age and Size.

Class

Class, as used by the appraiser, defines groups of properties which are similar in their physical characteristics.  Dallas Central Appraisal District, for example, has 23 different classifications of residential homes ranging from Class 1 (a “Shotgun” house, generally located in a low value Neighborhood) to Class 25 and 26 (generally estate size properties with custom features throughout and located on larger lots).  In between, differences can be as subtle as Frame on Post (Class 2), Frame on Slab (Class 3) or Frame on Pier and Beam (Class 4).  Or Brick Veneer on Pier and Beam (Class 8),  Brick Veneer on Slab with Shallow Roof Pitch (Class 11) or Brick Veneer on Slab with High Roof Pitch and Higher Quality (Class 12).So if you are using for a comparable sale a property that’s in a lower class, the district and the ARB will adjust the comparable upward to make it fit your property and the upward adjustment — which is usually a standard percentage added to the comparable’s price — can inadvertently support a higher value for your property rather than a lower one.  The lesson:  be careful when selecting comparable sales and don’t take what a CMA from MLS offers without checking for class differences.

Effective Age

Effective Age is not chronological age..  A home built in the 1930’s may have been remodeled in 2010 while another built in 2000 may be effectively older than the home built earlier.  We consider Year Built as a guide in evaluating comparables but more importantly Effective Age (which is not a factor in MLS) relative to yours.  If there’s a significant age difference, it might be advisable to tell us about it so we can use it to your advantage.

Size

Size is also significant.  All other things being more or less equal, larger homes appraise for less per square foot than smaller homes.  We search for comparables within a range above and below your home’s size and we include size (living area) in our presentation to the ARB, which values properties within 200 sq ft living area of the yours over those larger or smaller.It’s important that your comparable sales are as close as possible to your property in Neighborhood, Class, Effective Age and Size.  Frequently we cannot obtain comparables sales that are directly comparable in all categories because such sales did not take place within the time period that makes them relevant.  In that case, we may widen the search.   The district’s appraiser labors under the same limitations so the result should be that both we and the appraiser are “speaking the same language.”The result, we believe, is more comparability than if the sorting and filtering were done by a real estate broker through MLS without regard to the characteristics that matter most to the appraisal district or to the ARB. To sign up, simply return these two Documents. Send no money.

One. Owners who protest pay less than those who don’t.  In DFW last year Appraisal Review Boards reduced the tax rolls by almost 10%.  Did you get your share?

Two:  Those who use a professional do better than those who don’t.  At Property Tax Protest we’ve  been fighting taxes for thirty years for ourselves and for our clients.  Experience counts.  

Three: Those who don’t protest pay for those who do.  The tax revenue lost from ARB ordered value reductions must be recovered by rate increases that apply across the board.  The higher your value the more you pay for others’ reductions.

‍

At Property Tax Protest we show you your neighbors’ reductions and information about your own property that you likely didn’t know.  And we’ll represent you for 1% of your market value reduction.  If there’s no reduction there’s no fee. To sign up, simply return these two Documents. Send no money.

A tear down can be a double whammy against you.  Appraisal districts impute value to habitable improvements but buyers deduct for the cost of removing them.A tear down is usually a property where the land value exceeds the improvements value by a wide margin.  For example, a Property Tax Protest client lived in a property where the land value was $1,200,000 and the improvements value was $440,000.  That ratio of land to building indicated that it was a tear down because no buyer would pay $1,640,000 to live in a home valued at $440,000 when he can pay $880,000 for a similar home on a lot of equal value to the improvements.The appraisal district’s argument was that the improvements are habitable and therefore have value.  True enough but the value is only to the current occupant, not to a potential buyer. The market does not recognize habitability value to the current occupant.  For example, an owner who remodels a property to accommodate  unique physical disabilities (elevator, widened doorways, disability bars on walls, fire escape, etc.) will have more invested than the market will support.  Habitability is personal to the inhabitant, not to the market.  (The District recognizes this when it values a pool at less than cost to the current occupant; not everyone wants a pool.)We obtained a reduction from $1,640,000 to $1,150,000 which was $50,000 less than land value.  We argued that the cost of removing the improvements reduces what a buyer will pay for a tear down.  We can do the same for you. To sign up, simply return these two Documents.   Send no money.

Two Reasons:  1.  The Property Tax Code provides that in the year following a successful protest the Chief Appraiser may not increase the market value of a homesteaded property without “substantial evidence.”  This is a higher threshold than would apply without the prior year’s successful protest.  Property Tax Protest uses this argument successfully; most protesters don’t.Does the “substantial evidence” rule guarantee that your reduction will survive beyond one year?  Not if an increase is supported by “substantial evidence” which is a term of art.  And art, as we know, is in the eye of the beholder which in this case is the Appraisal Review Board panel that decides on a protest.But if in the following year the appraisal district reverts your value to its prior year proposed value, then it’s likely there’s no substantial evidence to support the reversion.  Otherwise, the evidence would have supported something other than a simple reversion.  Most who protest don’t use this logic.  We do.2. Since future value increases are usually calculated as a percentage add on to the prior year’s value (the appraisal district will deny this) any reduction this year also reduces many future years’ values.To sign up, simply return these two Documents. Send no money.

Ever since Tarrant Appraisal District implemented a new computer system in October 2014, problems have plagued the district, its taxpayers like you and its assessor/collectors who have lost money big time.  Here’s a short history and what you can do to protect yourself.TAD implemented the new system for calendar 2015 and left hundreds of millions of dollars of property values off the books or undervalued.  The result was millions of dollars irrevocably lost revenues for the taxing authorities and a bonus for some owners who were either overlooked or under assessed.  In an attempt to make up for lost valuations and revenues TAD then greatly increased valuations in 2016, resulting in more than 100,000 taxpayer protests — almost double the average number received in prior years.  Many residential proposed value increases exceeded the 10% statutory limit on taxable (or assessed) value increases so the taxing authorities couldn’t catch up with TAD’s 2015 error.  It will take some years for that to happen. TAD was also late in sending correct data to the tax assessor/collector’s office resulting in some owners not receiving their statements in time to pay before the end of 2016.  See http://www.star-telegram.com/news/local/article115891053.html

What can you do to protect your taxable value?

First, if you are a homesteaded property owner and your taxable (or assessed) value is significantly below your market value you’ll pay taxes on the lower value which should ease the pain but not forever.  

‍Should you ignore protesting for that year?  

No, because you may never have as good an opportunity to reduce your market value as you have when it jumps more than ten percent from the prior year.  The lower assessed value increases 10% each year until it equals then market value.  Protesting now to reduce your market value — even if it doesn’t go below your taxable value this year — produces savings in future years when the limitation runs out.  And since future increases are typically a percentage applied to the prior year’s market value (TAD will deny this) those savings continue for many years to come.

Second, protest Inequality of Appraisal as well as Value Over Market.  Most taxpayers don’t fully appreciate the Inequality argument.  In a market where large numbers of properties are under assessed the Inequality argument has particular relevance. Inequality is a complex argument but in essence it says if a reasonable sample of properties “similarly situated or of the same general kind or character” to yours is appraised at a median 90% of market, then your property is entitled to a 10% reduction.  Inequality applies even if your assessment is already below what comparable sales will support or even below what you recently paid for the property.  Since the reduction is a percentage, this applies especially to the higher value properties.Inequality of Appraisal requires a sophisticated analysis and argument; comparable sales alone won’t suffice and a CMA from MLS won’t come close.  Property Tax Protest has years of experience with Inequality; it’s yours free when you hire us.