Filing a protest of your noticed value is an important right the State of Texas grants its taxpayers. There are many reasons to appeal that affect many different parties. In this blog, I would like to share with you just 4 main reasons to appeal your Proposed Value.
Reason 1: Makes a Positive Impact on Communities
Reductions to appraised value and tax burdens are inappropriately judged as only helping property owners, but the truth is quite different. Multifamily property owners serve entire communities by providing safe housing and amenities for residents and their families. By reducing the tax burdens of a property, owners are able to improve/update units, provide extra services to tenants, and offer improved amenities. This is all made possible through lowering of tax expenses.
Reason 2: Holds Counties Accountable
Counties are responsible for setting the appraised value of all real estate in their jurisdictions. This is often a burdensome job with only a few appraisers in an office. Without taxpayers’ appealing values and providing appraisal districts with information not readily available to the general public, values could become inaccurate county-wide and with little other recourse for taxpayers. Appeals help keep appraisal districts’ values in line with current markets.
Reason 3: Keeps Costs Down
This is a rather simple reason to appeal that serves residents of a multifamily property. Property taxes make up one of the largest annual expenses for these types of properties. Often, when expenses increase or stay high, a portion of these expenses get passed onto the tenants. Keeping a property’s taxes low is a way to combat increased rents and provide more affordable rates for families.
Reason 4: Expansion
Finally, if a multifamily property owner can combat expenses within a market, there is an incentive to reinvest in that market. A lowered tax burden means an increase in the attractiveness of purchasing more properties or even building in a certain area. The increase in multifamily properties coming online in a market creates a boost in that area’s economy raising wages, creating new jobs, and providing vendors with more work.
Whatever reason speaks to you more as a multifamily property owner, I hope that you understand the importance of your appeal on not just your own bottom line but also your community.
Filing a protest of your noticed value is an important right the State of Texas grants its taxpayers. To combat over taxation, multifamily property owners should be knowledgeable of a few terms so that they can effectively navigate the appeals process.
Notice of Appraised Value – This is the notice that the Central Appraisal District (CAD) sends out to property owners within its county stating the county’s opinion of value concerning a specific piece of property. This notice should provide taxpayers with a proposed assessed value, as well as a deadline to appeal this value.
Assessed Value – In Texas, the assessed value of a multifamily property is equal to the market value of the property (or the price that the property would exchange hands in an open and free market through an arm’s length transaction). This value is significant because it is then multiplied by the jurisdiction’s tax rate to calculate the annual property taxes owed on the property.
Notice of Protest – This is a document filed by the taxpayer to dispute the proposed assessed/market value of a property. This form may be found through the local CAD or the Texas Comptroller’s office.
Appraisal Review Board – This administrative board hears protests to proposed assessed/market value of the property. A taxpayer who filed a protest of their proposed value will go before this board and make their case if a settlement is not reached with the CAD.
Exhausting Administrative Remedies – Texas law uses this phrase when describing how a property owner may file a lawsuit against a CAD concerning a property’s proposed value. The term ultimately means that most taxpayers must file a Notice of Protest with their CAD and conduct an ARB hearing before they may file a claim to the court concerning the matter.
Sales Approach to Value – A settled method of valuing property using sales of comparable property in the same market as the subject property.
Cost Approach to Value – A settled method of valuing property using costs associated with producing a similar or near-identical property in the same market as the subject property.
Income Approach to Value – A settled method of valuing property using the income potential of a property. This is the favored approach when dealing with multifamily properties.
Uniform and Equal Appraisal – This is a constitutional requirement for CAD’s to value similar property similarly. Properties that are valued unequally to comparable properties should be corrected.
These are but a few of the terms and buzzwords used in every valuation cycle, but hopefully, it is enough to help you with any of your future appeals. For any clarification or additional help, please talk to your property tax agent today.
Before talking about the benefits of filing your property valuation appeal to court, it is important to understand what you must do first before you can file. In Texas, a taxpayer seeking to litigate their property value appeal must first exhaust their administrative remedies. This means that a taxpayer must first file a protest of noticed value with the valuing Central Appraisal District (CAD). Following an informal meeting with their CAD, the taxpayer must then have a hearing before an Appraisal Review Board (ARB). Once the taxpayer has this hearing, then they can file their protest to court.
Benefits of Filing to Court
The benefits of filing your value protest to court are simple, yet important. For starters, filing to court gives you another chance to have your case heard, or another bite at the apple. Never underestimate a do-over in life. Second, the court hears your case de novo, which means “from the beginning”. This is very helpful to taxpayers because they most likely lost or did not get the reduction they were seeking from the ARB if they are now filing to court. Without the burden of overcoming an ARB hearing, taxpayers can expect a fairer hearing. And finally, filing your case to court can give you an opportunity to better prepare your case and give you the time needed to present it. In an ARB hearing, you often only have 15 minutes to present all your evidence.
That is not a lot of time if there are complex factors you wish to present. In litigation, you have plenty of time to progress and share these issues with both the court and the CAD.
Ultimately, filing to court can offer property owners another chance at relief and a fair valuation. However, taxpayers need to be smart about when to take their protest this extra step. Litigation can be expensive, time-consuming, and burdensome. Suing the CAD should only be a last effort when you not only fully believe in your case, but know the outcome would significantly impact your value.
For any help or guidance in dealing with your protests, please feel free to contact our team today.
You Absolutely Can, But What Are the Pros and Cons?
Texas Believes in Property Rights
Texas believes in property owners’ rights and has set up its system to allow property owners to appeal their own properties. This means you can absolutely appeal on your own. Doing it yourself means you will need to prepare your evidence and be ready to present it to the Central Appraisal District or the Appraisal Review Board. If you are not satisfied with the results at those levels, you can hire an attorney to pursue more in litigation. If your property is small enough, you may even be able to represent yourself in arbitration rather than filing in court and hiring an attorney.
Pros and Cons to Doing It Yourself
Things to consider when deciding to appeal your own property valuations.
You don’t have to pay anyone based on your tax savings
You know everything that is happening and you don’t need to rely on someone for an update
You care deeply about your property
You know the story about what is happening in your market
You are alone in the process and it isn’t your full-time focus
Limited or no access to valuations tools that require costly subscriptions
Limited market data revolving only around your property
Limited time and a need to work on other responsibilities
Frustration dealing with slow processes
Researching and understanding the nuances of the property tax law.
Hiring an Expert can Ease Your Burden
Appealing on your own has its benefits, but in many cases, the frustration and time spent are not worth the reward. In most cases, it is better to reach out and ask an expert for help. They are able to focus their time on your case and help you achieve great results. The results far outweigh the costs for their services.
If you have questions or would like to see what an expert could do for you, the specialists at Wayfinder Tax Relief are ready to help
In Texas, property owners are issued annually a Notice of Value from the Central Appraisal District (CAD) where their property is located. These notices of value are the CAD’s determination of a property’s market value and will influence a property’s tax liability in the coming year. Taxpayers have the option to appeal this value if they believe it to be too high. To do this, taxpayers or agents must fill out Form 50-132 from the Comptroller’s Office and file it with the CAD that issued the Notice of Value before the indicated deadline.
Informal Meetings and Appraisal Review Board Hearings
Following a successful filing of an appeal, the taxpayer is then able to meet informally with the CAD and attempt to reach a settlement. Reach out to your local CAD if you have filed a protest and ask for a time to meet informally. Most cases settle at this informal stage. If a settlement cannot be agreed upon with the CAD informally, the taxpayer and the CAD will then go before an Appraisal Review Board (ARB) for a hearing on the dispute. Both sides will present their case in a 15-minute hearing, and the Board will issue a decision.
Post ARB Hearing Options
Following an ARB hearing, taxpayers have yet another option to seek tax relief. If a taxpayer is not satisfied with their property’s value after an ARB hearing, the taxpayer may file a lawsuit against the CAD in court. However, it is important to note, litigation is only available to those that have “exhausted their administrative remedies” before filing to court. This means that a taxpayer can only file a lawsuit concerning their noticed value if they have filed an appeal and had an ARB hearing as stated above. Of important note, certain properties also qualify for arbitration with the CAD. This can be quicker and cheaper than litigation but requires certain, specific factors exist before taxpayers may seek relief in this manner. Please consult a Texas property tax expert in determining if your property qualifies for arbitration.
This process happens every year and many property owners have little understanding of this process and their rights. If you are a multifamily property owner in Texas, please reach out to one of our specialists so that we can help navigate you through this process and get you the tax relief you need.
How Much Can My Texas Multifamily Property Value Increase?
Taxable Value Equals Market Value
In Texas, Central Appraisal Districts (CADs) are tasked with valuing property within their jurisdiction for taxation purposes. This taxable value is 100% of its “Market Value” in Texas, which is essentially what the property would sell for in an open and fair market. CADs use recent listed sales, income production documents, and cost documents to value these properties at a level they believe would entice sellers and buyers in the market to come to the table. As a result, when something happens in the market that will significantly affect the sale price of these assets, taxable values should respond accordingly.
No Limit to Increase in Value
Unfortunately for those owners that like to work with set values, there is no limit to the increase or decrease of a property’s taxable value from one year to another. All that is required of the CAD is to find the market value of the properties it values as of the valuation date, regardless of previous years values. Resultantly, some Texas jurisdictions have recently seen their property values increase over 100% in one year following a boom in real estate values on the open market. Buyers and sellers are trading these properties at higher numbers, so the taxable values have followed suit. While this may provide little comfort to the owner that saw their taxable value jump significantly last year, this is the reality of ad valorem taxation on real estate within Texas. Taxable values can and do jump up significantly. The only partial limit to increased tax burden for property owners is that the Texas legislature does put restrictions on increasing tax rates annually.
Get Help With Unexpected Expenses
Because of this reality, many owners feel stress and uncertainty when taxable values come out every year, and the importance of a strong tax advocate cannot be overstated. Owners face unexpected tax expenses often in Texas, and the ability to offset some if not all of this increased expense can make a big impact on the communities these owners serve. If your multifamily property tax bill has increased in the past few years, please reach out to a specialist today for help in getting a fair market value of your property.
When taxpayers are deciding to file a protest of their noticed value, they must first come to an opinion of value. If the taxpayer’s opinion of value is less than the noticed value, it may be worth filing an appeal. However, taxpayers should be honest in their valuation approaches so as not to file a fruitless or even frivolous appeal. Examine market impacts and see if there are any sales of comparable properties near your own. You can also look at similarly situated properties and see if they are near your same value. If after you have done your due diligence and come to the unbiased opinion that your property is overvalued, you then need to consider the impact of an appeal.
Is the Reduction Significant?
After you have settled on a value for your property you believe the evidence supports, it is then important to analyze the impact your reduction will have on your tax liability. To roughly calculate the tax savings a successful appeal will yield, subtract your opinion of value from the noticed value. This number is the reduction to the value you believe you can secure. Multiply that number by the most current tax rate used in that county and you can estimate your tax savings following a successful protest. Is it enough for you to file the appeal and potentially go to an appraisal review board hearing? If so, file that appeal right away! Otherwise, maybe just keep one eye on the value in future years and file an appeal when the property does become significantly overvalued.
That’s all you need to do when deciding on filing a protest. Examine your market to see if an appeal can even be successful, and then review the tax savings of a successful appeal so as not to waste your time for nonconsequential savings. If you need any help deciding on the success probability of an appeal or calculating your savings, please contact one of our Texas multifamily specialists today.
Imagine you are traveling and you come to a fork in the road. Both routes eventually lead to your destination, which makes you wonder if it matters which route you take. So you ask yourself this question: Which route will get me to my destination in the fastest, most enjoyable way? If you are going to make the drive, you might as well enjoy it.
So it is with property valuation appeals. Whether you appeal it yourself, or you hire a property tax agent, the goal is to still settle with the Central Appraisal District (CAD) or have a hearing before the Appraisal Review Board (ARB). The destination may appear the same, but the journey and results can be very different.
Course 1: Doing it Yourself
When handling your own protests, it is common that there are many projects and important tasks that pull you in a million directions, because property taxes are usually only one of the hats you wear. They are easily put on the back burner for another day down the road, while more pressing sales tax issues or real estate deals are considered. Since property taxes on Texas multifamily are the number 1 or 2 expense item, it is clear that affecting that expense can have a tremendous benefit to your bottom line. Yet, it is still easy to be overwhelmed with all the specific deadlines and valuation evidence. Successfully appealing your valuation involves arguing valuation concepts and knowing the market. It involves studying comparable properties, documenting adjustments to their valuations, and attending meetings with the CAD or ARB. In the end, your simple appeal may take many more hours than you anticipated or wanted to give it.
Course 2: Hiring a Property Tax Professional
Hiring a property tax agent can alleviate most if not all of the above stress. An agent takes on the responsibility to ensure filing deadlines are met, evidence is gathered, and hearings are attended. Because agents focus on property valuations, they can give dedicated time to knowing your properties and aiming to secure you the best reduction. They are familiar with the laws and the markets. Following this course usually results in better outcomes for you, with a lot less time commitment and stress.
So How Long Will My Protest Take?
The ultimate answer depends on the course you choose. While both will typically last about the same number of calendar days, doing it yourself will involve substantially more time and commitment from you. If freeing up your time for other important projects, and potentially securing greater tax reductions is appealing to you, consider hiring a property tax professional to handle your appeals.
How Does Filing an Appeal Make a Difference on my Property Taxes?
Don’t assume that the Central Appraisal District is correct
What types of issues can be corrected by filing a protest?
One of the simplest reasons for filing a protest of your noticed value is to correct misinformation. This could be from incorrect building size, land size, construction quality, ownership, or other reasons. Additionally, contesting the noticed value can allow you to provide property-specific facts that are not accounted for in the mass appraisal valuation method, and thereby change your taxable value.
Is the system set up for me to fail?
Texas has a wonderful property tax system that is designed to ensure taxpayers are heard. Part of this process revolves around evidence supporting the noticed value. As a taxpayer, you need to prepare and bring your own evidence, but unlike most other states, the Appraisal District is not presumed to be correct at your hearing.
Under the Texas Tax Code §41.43(a) the Appraisal District bears the burden of proof to support their value. In other words, they need to prove why the value they set is accurate. This unique system is not set up for you to fail. Come with evidence supporting the correction you are seeking and present your case before the Appraisal Review Board.
How does any of this make a difference to me?
Your Texas property tax bill is determined from your taxable value multiplied by the tax rate. When you protest the noticed value and the result is a reduced valuation, your tax bill will be lower. Additionally, under Uniform and Equal provisions, others can be helped by your protest. Placing checks and balances on government taxation and overreach is a freedom we hold dear in this country. While we are subject to property taxes, filing an appeal of your valuation is one way you can exercise your freedom to ensure that you are not being overtaxed.
Here is an example of just what protesting your taxes can look like to you.
The noticed value was $2 million and after the taxpayer’s appeal the value was reduced to $1.5 million. The tax rate in the jurisdiction is 2.5%. The $500,000 reduction in the noticed value would reduce the taxpayer’s property tax bill $12,500.
Wayfinder offers taxpayer representation and assistance
If understanding and filing your own protest feels overwhelming and complicated, don’t worry. Wayfinder’s property tax experts offer personalized service to know your properties and help you achieve the lowest legal value for your property. We help liberate capital for our clients so they can do what they do best without stress.
Helpful Hints When Protesting To The Appraisal Review Board
Know Your Rights
As a taxpayer that has decided to appeal the noticed value of your property to your local Appraisal Review Board (ARB), you need to know some of your rights to have a successful appeal. First, you have the right to inspect the Central Appraisal District’s (CAD) evidence before your hearing. As long as you made a request, Texas law requires that the CAD send you their evidence fourteen days before your hearing. Use this right to examine the CAD’s evidence. Additionally, there are several ways to reschedule your hearing. Arguably the most common way to reschedule a hearing for an owner with multiple properties across multiple counties is if the owner has hearings scheduled on the same day in different counties. Whichever county notified the taxpayer last on those same day hearings must reschedule their hearing. And finally, you have the right to appeal any ARB decision to litigation (or arbitration if your properties qualify) following your ARB hearing. In most cases, you will have sixty days after the ARB hearing decision was issued to file to court or an arbitrator.
Tips when in an ARB hearing
There are also things you should do in your ARB hearing that will help your appeal chances and your reputation with the county. First and foremost, prepare your case, and have evidence. If you show up at an ARB hearing without doing your homework on the property or market, you most likely will not find a sympathetic board. You need to have evidence supporting your requested value, and it should make sense. You also need to review the CAD’s evidence and come prepared to rebuff or correct their support. Second, be respectful. These hearings can get heated for taxpayers especially when their outcome may impact peoples’ jobs or livelihoods, but remember, these board members and the CAD representative are just doing the job required of them by Texas law. Stay calm and respectful at all times while still vehemently stating your case. It will help you when the board deliberates and protect your reputation in that county.
After the Hearing
After the hearing has concluded, it’s time to review your appeal. Yes, you need to examine the possibility of pursuing litigation or arbitration like we covered earlier, but you also need to evaluate what evidence worked and what did not. This is extremely helpful because you may have another hearing before this board this same year for a different property and need to rethink your strategy/valuation methods. Moreover, the members on these boards can stay around for years so you could have the same board members for several years in the future. You need to be thinking about how you can improve your appeals and make them more persuasive to those specific members.
If you have any questions about how to handle an ARB hearing successfully, please contact one of our Texas multifamily specialists today.