Everyone makes mistakes, and sometimes people miss deadlines. We’re all human. But if you are a multifamily property owner in Texas who has missed the deadline to file a protest of value with your local appraisal district, there may be little hope for suing in court. 

In Texas, deadlines are everything and there are consequences to missing them. The Texas Tax Code requires taxpayers to “exhaust their administrative remedies” before they are able to file a property valuation appeal to court. In layman’s terms, this means you cannot file a lawsuit against your taxing county unless you have attempted to lower your property’s value through their administrative appeal process. This creates big issues for owners who have missed their appeal date but feel their values are unjustifiably high. Most will be stuck with this value. However, certain factors could be in play that may just save a few owners.

Correcting Errors on the Roll

As stated in a previous article, there is hope for property owners who have missed their deadlines and can meet specific requirements. Section §25.25 of the Texas Tax Code allows a taxpayer to correct certain errors that can result in lowered taxable values regardless of regular appeal deadlines. These appeals can be filed all year round. While these protests do not allow taxpayers to skip the administrative appeal process and go to court directly, they do give owners the opportunity to again “exhaust their administrative remedies”.If there is an unfavorable result after following proper procedure (an appeal and resulting Appraisal Review Board), the taxpayer may then file a lawsuit against the taxing jurisdiction.

Wayfinder’s Guidance

Missing an appeal deadline can impact a multifamily property owner’s bottom line terribly, as well as the communities they serve. As an owner in Texas, you need a strong ally that can help guide you through this significant time and yield more tax savings.

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Property Tax Basics

Each year, multifamily properties receive a valuation notice and later, a property tax bill.  Property taxes are used to fund local schools, city and county governments, and other local projects.  Since Texas does not allow income tax, property taxes become extremely important for funding the local government.  

Every county has a Central Appraisal District and its responsibility is to determine the market value of each property in its respective county.  To accomplish this goal, they must use methods of mass appraisal and make many assumptions about properties as a group.   

The Central Appraisal District does not determine or tax your property.  They don’t even set the tax rates.  The local taxing units set the rates and collect the taxes.      

Inaccurate Valuations

As you can imagine, a process that makes assumptions for large groups of properties leaves a lot of room for mistakes.  For your Texas multifamily property, you should never assume that your property has been valued correctly.  The valuation should be reviewed within the 30-day deadline, giving you time to appeal it.  For established multifamily properties, they are most often valued on an income approach.  The income approach looks at the net income and a return rate in deciding what a potential investor would pay for the property.  Using market rents and market expenses produces a market valuation, known as Fee Simple.  Using contracted rents and actual expenses produces a valuation known as Leased Fee.  The goal in Texas is to determine the Fee Simple valuation of your property.   

Controlling Your Property Taxes

When you consider all the annual expenses at a multifamily property, property taxes are the largest, typically making up 33% of total expenses per unit in garden apartments and 39% of total expenses per unit in mid & high-rise apartments according to the National Apartment Association 2020 Survey of Operating Income and Expenses.  

Cost cutting measures can easily be swallowed up by increasing property taxes.  Fortunately, you do have options to combat property tax increases.  If you feel your property is overvalued for tax purposes, you can file a protest with the Appraisal Review Board in the county where your property is located.  During the process, you will need to provide evidence showing why your valuation is excessive.  Remember: this is an argument about the valuation being too high, not the property taxes.  Stating that your taxes are too high will not secure a reduction to the noticed value.  If the protest is determined in your favor and your valuation is reduced, this will have a direct impact on your property tax expense.  Paying close attention to property taxes can have a significant impact to your bottom line.

Don’t Ignore Your Valuation

It is so easy to get caught up in other responsibilities and forget the importance of the one little piece of paper stating your property value and appeal deadline.  Yet, that paper can potentially be one of the most significant ways to reduce your expenses and increase your profitability.  In the rush of everything else, don’t forget to look at your property taxes.  If you are overwhelmed by all you have to do, property tax appeals can be taken off your plate by giving it to a multifamily property tax specialist.  Done right, tax agents should expand your capacity while eliminating your stress. 

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It is now the middle of May, and notices of value for most Texas counties have been out for several weeks. The time for multifamily property owners to decide whether they should appeal their noticed value has come (and may have passed in some jurisdictions). Under most circumstances, Texas law requires property owners wishing to file a protest of their noticed value to file a written protest by May 15th or 30 days after the delivery of the notice, whichever comes later, as spelled out in section §41.44(a) of the Texas Tax Code.

However, it is common for property owners to miss this deadline, especially following the eventful year that was 2020 and the Artic freeze of 2021. For those that have made this mistake, there is still hope to reduce your taxable value.

Texas Loves its Taxpayers

As stated in previous articles, Texas is pro-taxpayer. They care about their citizens’ rights and offer them numerous avenues for tax relief. Taxable property values are no different. For property owners who missed the deadline to appeal their value, there is still a route for getting a reduction. Texas Tax Code §25.25 provides a taxpayer the opportunity to force a “Correction of Appraisal Roll”. This can be done by proving one of the following:

• There has been a significant error on valuing the property
• The appraised value exceeds one-third the correct value

The law is unclear what defines an “error” in this context, but some general examples are:

• Incorrect square footage of a building
• Calculation errors
• Boundary/taxing power issues 

These have been some acceptable arguments in reducing values under Texas Tax Code  §25.25. The Texas Comptroller’s website has a form you can fill out and file if you believe you can meet the above requirements.

You are Not Alone

While a section §25.25 protest is the most common method for reducing values after a deadline passes, there are still several other options for taxpayers with unique circumstances surrounding their notices and properties. If you are a multifamily property owner and your deadline for filing an appeal has passed, do not throw in the towel just yet! Contact a multifamily property tax expert today and learn your rights as a Texas taxpayer. 

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Here’s How to Appeal Your Valuation 

As we enter the late second quarter of 2021, local taxing jurisdictions within Texas are sending Notice of Values to property owners. These values are instrumental in the property tax cycle because they are multiplied by local tax rates to establish a property owner’s taxes. Therefore, a higher value generally means higher taxes. These values are set by local government offices called Central Appraisal Districts that provide taxpayers with a proposed value and a deadline to appeal this value. All across Texas, property owners are now weighing their appeal options as property values are jumping, according to ABC 25. Appealing this value may seem intimidating, but anyone can start the appeal process in three simple steps.

Steps to Appeal Your Valuation

Step 1 – Obtain a Form 50-132 from the Texas Comptroller’s office. The title of the form is Property Owner’s Notice of Protest and can be found here. 

Step 2 – Follow the instructions on the form and fill it out completely. If your appeal is not settled with the Appraisal District and you need to attend a hearing before an Appraisal Review Board, you must decide whether to attend the hearing via phone/computer, in person, or simply submit evidence on the record. Remember, if you wish to file an appeal on multiple properties, you need to fill out and file multiple forms. 

Step 3 – File the protest with the appropriate Appraisal District. Your appeal is with the appraisal district where the property is located, not the Comptroller’s office. For example, if you have property located within Ector county, you need to file your protest(s) with the Ector County Appraisal District. However, the Texas Comptroller’s office does have a directory for counties to assist taxpayers with proper filing of protests. 

Additionally, you must file this protest on or before the listed deadline date on your Notice of Value form you received from the appraisal district.  More and more counties are moving toward online/paperless filing of protests. If you would like to avoid mailing in your protest, check with the appraisal district you will be filing the protest in to see if they allow for email or online portal filings. It will make your life that much simpler. 

Congrats on Filing Your Protest! Now What?

Now that you have filed your Property Owner’s Notice of Protest, you will have to defend your reason for the protest, put forth your own opinion of the property’s value with supporting evidence, and convince either the appraisal district or an Appraisal Review Board that your opinion is justified. This is not an easy task. However, do not worry if you find yourself intimidated or feeling lost in this upcoming process. Wayfinder specializes in Texas Multifamily valuation appeals, and we know how to guide owners through this difficult path to tax savings. 

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With slashed revenues and the perception that property values are getting higher, local governments are looking to squeeze whatever they can out of every property in their jurisdiction. For local governments that rely on property taxes for much of their revenue, appraisals aren’t reflecting the high unemployment and unstable economy we are living in (Texas Tribune).

But, 2020 wasn’t just tough on local government; it was also extremely difficult for multifamily property owners. These owners were tasked with keeping communities afloat while rental revenues were cut, stalled, or severely slowed. Further, they had to do it with less income. According to a CNBC article, about 18% of American renters were behind in their payments at the end of January 2021. 

Government relief is not enough; multi-family property owners are going to have to find another way to make it in this environment.

Facing Excess Valuations in 2021?

During this year, multifamily property owners helped carry many of the families who rely on your properties for quality housing. The Fort Worth Star-Telegram reports that “landlord’s issues have been overlooked” as they continue to lose income while still being expected to pay their bills.

Further, multifamily property owners cannot also be expected to carry the county governments. They need someone to stand beside them and hold firm against excess valuations. Just because single family home property values have jumped does not mean that the renters can pay higher rates. Rental revenues remain limited while the tax assessments are demanding payments that are far more than feasible or fair.

The Wayfinder Way

The laws of the great state of Texas are pro-taxpayer. Property owners have rights, and if they align with the right team that has Texas-specific experience and expertise, county assessments can be significantly reduced and remove unnecessary tax burden. Owners don’t have the time or the energy to fight this on their own, and there is a pretty good chance that their current tax agent does not have the bandwidth or specific expertise to get the reductions needed.

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3 Points to Keep in Mind When Appealing

Right now, the safety of your team members, residents, and the uncertainty resulting from this pandemic have likely pushed property taxes to the far regions of your mind. Not to worry, we exist to handle your property taxes so you can rest assured they are being addressed while you handle the critical issues facing your company.

Rising unemployment and government-mandated stay-at-home orders have a real impact on your residents and their ability to pay rent, directly impacting your gross income. Government restrictions have limited the ability to address non-payment and much about this year remains uncertain. One certainty, PROPERTY TAXES will come due regardless of how your property performs.

Whether you engage a tax consultant or appeal your own properties, here are three important points to keep in mind when protesting your valuation this year:

1. How are the current conditions impacting your rent collections?

2. Have your expenses increased due to higher usage or restrictions?

3. Last year property sales may not correctly reflect the market valuations today.

It is more important than ever that you engage multifamily property tax specialists to represent your properties and combat the rising property valuations. Reductions to your property valuation will directly impact your taxes and affect your bottom line, helping your cash flow when you need it most.

Wayfinder Tax Relief, LLC is the #1 multifamily property tax specialist in the industry. They focus solely on multifamily properties and are at the cutting edge of the industry change. They are involved in many local apartment associations and are members of the Texas Apartment Association and the National Apartment Association.