A Step By Step Guide To Challenge Your Property Tax

For more information contact: Dallas Central Appraisal District

How property taxes are determined

Texas uses the comparable sale approach for its primary method of assessing residential property values. The state requires that districts reassess properties at least every third year, although some districts reassess annually.

During the first half of an assessment year, local county appraisal districts research and review records and maps of properties within their jurisdiction to set values as of Jan. 1. Property taxes are calculated by multiplying the assessed value, which is set by the local county appraisal district, times the tax rate, which is set by each taxing entity.

Property assessment is a daunting and monumental task for the county appraisal district. For example, the Harris County Appraisal District (Houston) appraises more than 1.3 million real property parcels every year.

Because of the size and complexity of the task, as well as limitations on resources, most residential areas are assessed "en masse," meaning that the appraisal district applies computerized mathematical formulas based on market variables within a specific area to determine property value. Properties are not assessed individually and, as a result, characteristics that could raise or lower the value of each property are not considered. Therefore, the initial assessed value may not be correct for all properties.

From February through May, appraisal districts have the option to mail assessment notices to taxpayers. However, if the assessment amount is an increase from the previous year, the district must, by law, notify the taxpayer.

After the taxing unit adopts its tax rate in late summer or fall, annual tax bills are mailed to property owners. They are due as soon as they are received, but do not become delinquent until Feb. 1 of the next year.

Determining whether the assessment is correct

The most important dates during the tax year for homeowners are April 30, the last day homestead exemptions can be requested, and May 31, the last day to file protests. A homestead exemption is a percentage discount in taxes due that is given if a house is owner-occupied. The exemption amount varies among appraisal districts.

Property owners need to find out the assessed value of their home in March, April and May to determine if the assessed value is greater than the market value of the property. Individuals can do this by calling the county appraisal district office and requesting a copy of their assessment record. These records will tell property owners whether their property is accurately described.

Individual properties are described in detail on a database or record card at the county appraisal district. These records describe the size, physical characteristics and economic performance of individual properties. It is important to determine if properties are accurately described, since the data on the record card are often used to calculate value.

Protesting assessed value

If the assessed value of a property is indeed greater than the market value, the owner should file a protest with the county appraisal office by May 31 for the current tax year.

To file a protest, the owner or his appointed consultant/agent must notify the county appraisal district that has jurisdiction over the property in question. There is no required form for filing a protest. Forms can be requested from the district, although they are usually mailed along with assessment change notices.

Gathering information for a hearing

Once a protest has been filed, the appraisal district will schedule a hearing.

The protester should take great care in gathering information to present at the hearing. Three types of data for houses should he compiled prior to hearings at county appraisal districts.

• Pictures of the subject property

  Both staff appraisers and the appraisal review board appreciate pictures since they indicate the quality and condition of the building. Pictures showing needed improvements, such as a badly damaged roof, as of Jan. 1 should be taken and presented, if appropriate, along with the estimated cost of repair.

• Comparable sales

  The appraisal district gives strong consideration to sales comparisons. Comparable sales for nearby houses during the last year or two are excellent indicators of market value for your property. Pictures of recently sold properties can illustrate both similarities and differences between the subject property and the comparables.

  The local appraisal district office can give sales data on other residences in the surrounding vicinity. Because buyers are not obligated to disclose sales amounts, those figures frequently must be researched by the appraisal district staff.

• Assessment Comparables

  State law requires that properties be assessed on a uniform and equal basis. For example, if four houses on adjacent corners are all worth $100,000 and three of the four are assessed for $90,000, then the fourth one must be assessed for $90,000 (even if it is worth $100,000) to make the appraisal values uniform and equal.

  Collecting data on the assessed value per square foot for comparable properties can show whether there are grounds for a protest. Assessment values are public information.

How hearings work

There are two steps in the hearing process for most properties: the informal hearing and the appraisal review board hearing. The informal hearing involves a meeting between the taxpayer or his representative and an appraiser employed by the county appraisal district. If the taxpayer is not satisfied with the assessment offer made by the appraiser, he may proceed to an appraisal review board hearing.

The appraisal review board meeting involves three members of the 45-member appraisal review board (who are not employed by the county appraisal district), an appraiser from the county appraisal district (who may be different from the appraiser at the informal hearing) and the taxpayer or his representative. The appraisal review board panel may set an assessment value which is higher or lower than the level proposed by the staff appraiser at the informal hearing. Therefore, the offer made at the informal hearing deserves careful consideration.

Virtually all assessed values are resolved in a satisfactory manner during the informal or the appraisal review board hearings. However, there is a small percentage of cases (.5% to .75%) in which the property owner still believes the assessed value is greater than the market value.

It is financially feasible to file suit against the county appraisal district if the assessed value exceeds the market value by more than $200,000 to $300,000. Annually, about 500 to 800 property owners in Harris County decide there is still enough discrepancy after completing the informal and appraisal review board hearings to further pursue an adjustment in the assessed value. This process can result in additional tax savings, but requires 12 to 24 months before resolution.

Property taxes can be reduced. The key to successfully minimizing them is to understand the methodology employed by the county appraisal district and to collect and organize information which supports a lessened value.

About the Author

Patrick C. O'Connor, MAI, is president of O'Connor & Associates, a 30-person real estate services firm which provides property tax consulting and appraisal services.

Checklist for managing property taxes

Major Appraisal District Offices

Verify the appraisal district's data for your residence. Research values of nearby similar houses (assessment comparables). Compare market value to assessed value by researching sales of nearby houses (market comparables). Take advantage of procedures to file a protest or pursue litigation when appropriate. File a protest by May 31 Take pictures showing deferred maintenance. Summarize market comparables and assessment comparables.

The following are phone numbers to some of the larger appraisal district offices in Texas. To contact an office not listed, check the blue pages of your phone book or call information. Remember, assessments are conducted by the county in which the property resides. Bexar County (San Antonio) (210) 224-8511 Dallas County (214) 631-0919 El Paso County (915) 780-2000 Harris County (Houston) (713) 683-9200 Midland County (915) 699-4991 Nueces County (Corpus Christi) (512) 881-8022 Travis County (Austin) (512) 834-9317