What is the difference between the tax rate and the taxable value?
Who Exactly is Taxing You?
To accurately determine your property taxes, you need to identify each taxing jurisdiction for your property. There are typically several entities that will be taxing your property, and they are listed on last year’s property tax bill(s). Once you locate that list, you can confirm by reviewing the current year’s notice of proposed value. Typically, the notice of proposed value will list the taxing entities along with the estimated tax rates, possibly answering two of your questions at once.
It is also important to note that the taxable value and tax rate work together, but are very different pieces of information. The taxable value is the value that has been determined for your property as the basis for taxation. The tax rate is multiplied with your taxable value to determine the tax bill owed.
Where do I go to find out my tax rates?
Once you have identified the taxing entities, it is now time to locate their current tax rate. If you are determining the 2021 tax bill from the 2021 valuation, you will need to find the 2021 tax rates. Most of these rates are set in August or September, right before the tax bills are sent to taxpayers. The Central Appraisal District does not set the tax rates, but many times they will put the tax rates on their websites in an attempt to help taxpayers know who is taxing them and their estimated taxes.
For example, when reviewing the Dallas CAD website (dallascad.org) you can select “Search Appraisals” on the left-hand column. Then you can search for your property by owner name, account number, street address, etc. Once you have located your property, you can scroll down to the Estimated Taxes section, which lists the taxing entities and their tax rates. It is stated that those rates are estimates, so you should further confirm those tax rates.
Is there a second way to confirm my tax rates?
The Tax Assessor/Collector is responsible for issuing property tax statements. Their websites should have a list available for each jurisdiction and the associated property tax rate. The Dallas County Tax Assessor/Collector (dallascounty.org/departments/tax) has a link on the left-hand side titled “Tax Rates.” Click there to see the rates that are available, and you can even see the rates from a few previous years. If the current year tax rate is not yet available, then it likely has not been set or published yet. Continue to check back periodically during the fall until it is published.
What if I still need help?
Each Texas county uses a different process to find property tax rates. This article provides general information that has worked in many counties and is a great starting point when searching for your tax rates. If you need more specific help, or have detailed questions, please reach out to the experts at Wayfinder today.
The property tax world can be a complicated nightmare for many multifamily property owners in Texas. There are just so many variables and factors that need to be considered following a fair valuation of a property that it can be painfully confusing. Often, even the most diligent owners are ignorant of most of these factors and require guidance to navigate the appeal system. Some tax agents take advantage of this (reasonable!) ignorance and seek to twist it to their advantage. They will make promises they never intend to keep, blame others for their poor performance, and treat clients like a number while charging high rates. This is not fair to the taxpayer and should not be accepted as the status quo.
How to identify when you’re being taken advantage of by your agent
The good news here is that it’s fairly simple to spot the bad agents in these scenarios when you take a closer look. They usually are radio silent until they need something from you, and they typically avoid responsibility for most issues. If you want to test your agent, ask how your portfolio looks this tax year, or simply ask them when was the last time they saw your properties they represent. If it wasn’t at least within the past 12 months, there is a good chance you are being treated as just a number by your tax agent, and it may be time to make a switch. The same can be said if you never hear from your agent, or it takes them an unreasonable amount of time to get back to you. You pay them to help you through this process; they need to be available to you. Paying a premium for a service is great so long as you are also getting premium value in return.
What to do if you are being taken advantage of?
Leave your tax agent! Why would you settle for being insignificant to a person or group that you depend on for guidance and help? These properties are important to you, and they should be important to your agent as well. I promise you there are agents out there that will treat your properties as if they were their own. If you notice the described red-flag attitudes in your tax agent, make the switch.
If you have any questions about what to expect from a quality tax agent who cares about you and your properties, please contact one of our Texas multifamily specialists today.
Tax Bills are Made up from Many Taxing Jurisdictions
Should I Blame the Central Appraisal District?
When Texas property tax bills come out in October, your first response may be that they are too high. Property owners want to blame the Central Appraisal District (CAD), the entity that sets their property values. In this case, the CAD is innocent of the blame. While the CAD does set property values, they are not part of setting the tax rates, nor do they determine the ultimate tax bill. In fact, it is usually the Tax Assessor/Collector who issues the property tax bill.
Who Determines the Property Tax Rates?
Local jurisdictions such as independent school districts, colleges, hospitals, cities, and the county all need tax revenue to operate. Each year they submit their budgets for review and approval. Based on their budget, and the values of properties in their taxable areas, tax rates are determined so they can collect the amounts needed for their budgets. While the actual process can be more complicated, this can be illustrated quite simply using the following formula:
If a jurisdiction needs $1,000,000 and your taxable value is $250,000,000, then your tax rate would be $1,000,000 ÷ $250,000,000 = 0.4%.
Can I Do Anything About the Tax Rates?
Truth-in-Taxation requires that notices are published regarding public hearings about proposed budgets and tax rates. It is at these meetings that taxpayers can voice their concerns and seek that the proposed budget be denied. In cases where the tax rate increase is excessive, the increase will be placed on the ballot for voters to approve or deny. By exercising your right to vote, you can have an impact on whether certain tax rate increases are approved or denied.
I’ve Done Everything Right but the Taxes Still Went Up!
Sometimes you do all that you can to be heard, but the result is that tax rates–and your value!–still increases. This will cause your property tax bill to increase. Once valuations and tax rates are set, the tax bill needs to be paid. Each year you are given an opportunity to protest the noticed value of your property. If you are not reviewing your valuation and protesting when appropriate, you are missing at least one way of keeping your property tax bill lower.
As a multifamily property owner in Texas, you have most likely received a “Notice of Proposed Value” from your local county appraisal office and wondered whether to appeal that value. If you have never appealed this value, you may be unaware of the benefits that a successful (and even an unsuccessful!) appeal may bring.
The Impact on Your Relationship with the CAD
If successful, an appeal will result in lowering a property’s taxable value. This means tax savings for the owner. But even if your appeal is unsuccessful, just by filing it you will have had the opportunity to learn more about your county’s appeal process and build a relationship with your Central Appraisal District (CAD). Building this relationship can be invaluable in later years/appeals.
YOUR Impact on the Community.
In the multifamily industry, tax savings are often passed along to multiple parties; owners may see a healthier bottom line while tenants may see improved amenities and accommodations. However, there are also benefits to owners of different properties. By lowering the taxable value of your property, it may provide evidence for another owner of a comparable property to help lower their taxable value. Thus, the benefits that your property and tenants receive may also be possible for others in your market. Besides improving the lives of those in your communities, the beauty of this type of relationship is that this initial reduction may fuel tax savings for years to come because now the whole market has a lower taxable value. Upward movements in values will be offset by lower starting values.
And those are the two main impacts your appeal could have on both you and your properties, as well as the communities you serve. The next time you believe your property is overvalued by your local CAD, remember that the impacts your appeal can have are far reaching and helpful to all. If you have any questions about pursuing a valuation appeal for your Texas multifamily property, please contact our team of specialists today!
Every year, multifamily property owners receive a proposed notice of value for the properties they own. Left unappealed, this proposed noticed value will become the taxable value of their property for the current tax year. Many owners ignore these notices or simply approach it indifferently. They often ask, “Why should I file a protest of this value?” When examined, there are multiple reasons to file a protest of your proposed value.
Tax Savings can Benefit Multiple Parties
This is the most obvious and impactful reason owners should appeal their noticed values. By reducing the taxable values of their property, they can directly lower their property tax bills dues later in the year. The savings generated from these reductions can mean owners are able to improve the assets they currently occupy, or potentially acquire new ones. Never forget, the service multifamily property owners provide their communities is extremely important. Oftentimes, benefits that property owners receive work their way into the public in some form or fashion (be it new amenities, updated units, etc.). The benefits following tax savings are significant and far reaching for more than just the property owner.
Taxing Entities are Held Accountable
Central Appraisal Districts (CADs) are in charge of setting the value for properties within their counties. They have the difficult job of valuing every property in their county annually. This is impossible without something called “mass appraisal”. Mass appraisal is a way of valuing large groups of properties by applying common multipliers or factors to some individual characteristics of a property. However, the problem with this methodology is that it cannot account for factors plaguing individual properties. This is where the owners and agents of a property are able to help CADs accurately value a property. By sharing specific factors that impact your properties’ values, you can provide insight to the CAD that may impact not only your valuation, but other properties’ values. It helps taxing entities be more accurate.
Your Rights can be Exercised
Finally, appealing is a right afforded to you by the Constitution and laws of the land. Texans are big on believing their government should be working for them, not the other way around. If nothing else, your appeal will be a signal that due process in the Lone Star State is strong and present.
If you have any other questions as to why you should annually appeal your property valuation, please reach out to the specialists within our office.
If you appealed your multifamily property’s value, you most likely feel that your local Central Appraisal District (CAD) overvalued your property. As a result, you probably want to reduce that value and ultimately save yourself from paying unfair property taxes. Well, to do this you need to have strong evidence of your property’s overvaluation and explain this evidence effectively to either the appraisal office or an Appraisal Review Board (ARB). A common mistake made by individuals handling their own appeals is that they believe values increasing from one year to the next is by itself evidence that their appeal should succeed. That is not the case. You need to have strong evidence of what you believe the value should be to get that desired reduction.
Getting an Informal Reduction
In Texas, most CAD’s will communicate with taxpayers in an effort to settle the appeal and avoid an ARB hearing. To take advantage of this, you need to do research in your market. Are there sales comps? Did you recently build the property for less? Is the property charging less in market rent than it did in previous years? You really need to examine the functionality and external impacts on the property to determine if a reduction is warranted. Once you have strong evidence, reach out to the CAD. Most offices are happy to take a look at your evidence and at least communicate with you about why they set the value where they did. Remember, you have a right to the evidence the CAD used in setting your value, and you should request it when you reach out to attempt settlement of your appeal. Review it critically and fairly.
Getting a Reduction at the ARB
If you were unable to secure a reduction at the informal level with the CAD, it is time to prepare your case for an ARB hearing. These hearings are generally fair and most evidence is considered. To secure a reduction at these hearings, you need to put your evidence into one packet and make multiple copies to hand out at the hearing (check your local ARB hearing procedures packet for the exact number of copies needed). Next, you need to be sure that your evidence is accurate and can stand up to scrutiny. The CAD will most likely attack your evidence as unreliable and claim your requested value is too low. You then need to be able to attack the CAD’s evidence fairly, and cast doubt on their method of valuing your property. If you are more convincing, the ARB may choose a lower value than the CAD’s proposed one, or they may simply take your exact requested number if your case was strong enough.
There are two main ways to get a reduction to your property value: 1) informally settle with the property’s CAD, or 2) win your hearing before an ARB. Both of these stages are extremely important when pursuing a reduction, so please reach out to our multifamily property specialists for guidance, consultations, or excellent representation.
The Institute for Professionals in Taxation (IPT) has been around since 1976 and is a not-for-profit education association serving more than 6,000 members. As noted by the Institute itself, it is the only professional organization that educates, certifies and establishes strict codes of conduct for property tax professionals who represent taxpayers.
The IPT organization continually educates on property tax matters through various programs and classes. The CMI designation means Certified Member of the Institute, and it has been attainable since 1979. This certification is difficult to obtain and is more than a mere credential; it is a demonstration of expertise in business property taxation.
[H3] What the CMI Designation is NOT
To be very clear about what the CMI-Property Tax designation is NOT, it is not an endorsement from the Institute for Professionals in Taxation for any individual or firm. Just like a CPA designation, holding this certification does not mean that the individual or firm is endorsed by the state agency that issued the designation. It means the individual has been recognized for dedicating numerous hours of study to the field of property taxation.
Requirements for CMI Designation Qualification
In order to qualify for the CMI, an individual must:
Maintain membership in the IPT
Document many years of property tax experience
Complete several educational schools provided by IPT
Successfully complete both the comprehensive and oral examinations given by the IPT
After attaining the CMI professional designation, certified members must maintain continuing education hours with the IPT. This is comparable to other professional designations such as CPA, JD, etc.
Why it Matters
Not all who attempt to attain CMI certification are successful. In fact, only about 1,000 property tax professionals nationwide have ever earned this coveted certification.
The process is arduous and long. The tests are difficult and taxing, and it takes a dedicated individual to complete the requirements. As of the time of this writing, there are only about 480 active CMI-Property Tax holders in the United States and Canada.
Individuals with the CMI-Property Tax designation show a commitment to the property tax industry. It is not an endorsement from IPT, but it does indicate experience and knowledge on behalf of the individual.
Why we are passionate about knowing your properties
Appeals in a Big Firm
Everyone has reasons for doing what they do, and I am no exception. I used to be a partner at a national firm with properties all over the country. I took pride in my work and in our team, and I loved helping clients reduce their property tax burdens. After many years and thousands of hearings, I was given the assignment to handle our firm’s protests in Louisville, Kentucky. I eagerly prepared to go and attend the hearings, but as busy as we were, I was only able to review the properties from CoStar and the internet. I found comparable property sales and put together my evidence, sure that my workup was bulletproof.
Shocking Reality Check
When I arrived at the hearing, I began to present my case with full confidence in my work product. The board respectfully listened, and then when I finished they began to ask me some tough questions. They asked me about the neighborhoods and areas of town, and which adjustments were made and why. They asked about the condition of the subject and the comparables. I did not know the answers. Finally, I was asked a life-changing question: had I ever seen or visited any of the properties in person?
Under oath, I had to admit that I had not seen them. Their response shook me: “No one who knows anything about this part of town and these properties would ever consider them comparable.” That was it–the nail in the coffin. I did not secure a single reduction for my client that day, but I did walk out of that hearing with a firm conviction that I would NEVER be in that situation again. I vowed that I would represent my clients as if I owned the properties myself. I would visit every property and I would do my best to visit every equity or sale comparable we would use. At the end of the day, no one in the hearing room would know more about the subject property and the comparables than I would.
Upon seeing that I could not make that change in my national firm, I set out to create my own firm. I noticed that at national firms, agents are often overburdened and don’t have time to visit every property. The reason I founded Wayfinder is to be different from the busy national firms and to provide personalized expertise and representation. We are founded on the principles of integrity, accountability, and excellence. I have never forgotten the shame I felt in Louisville, Kentucky, and I never want to feel it again. When a client entrusts you with their appeal, agents should never take that responsibility lightly. They should do more than you can on your own because they are fully dedicated to representing properties in the appeal process.
Giving the Best to Our Clients
This monumental change in my perspective has caused us to spend countless hours visiting properties all over the markets where we represent our clients. The results have been profound. We have spent time learning the markets, asking questions, and becoming experts in the properties, knowing we are doing everything in our power to truly represent our clients.
You Need Someone in Your Corner Who Will Fight For You.
A Tax Agent is…
Licensed by the State
A Texas property tax agent is an individual licensed in Texas to represent taxpayers in the valuation appeal process. There are education requirements and certification exams proving a base level of competency in Texas property tax law before someone can become licensed. Once licensed, continuing education requirements ensure agents are staying up-to-date on Texas law and ethics. When evaluating an agent, first check to see that they are licensed and legally allowed to represent you.
Tax agents are meant to be your advocate and represent your best interests. They are an extension of you throughout the appeal process. Their goal is to reduce your property tax burden while preserving your relationship with the county. Your agent should communicate with you proactively and keep you in the loop. Unless you specifically state it, they should not be accepting valuations or settlements without your knowledge.
A Representative Who Works For You
Your tax agent should be working for you, not working around you. They should not file appeals on your behalf without your permission. Occasionally, you may find an agent who is overly aggressive and ignores your instructions. They may even threaten to drop your appeal if you don’t do what they say. These agents are acting beyond their authority, and you should review your rights to hire a more respectful agent. If you encounter a rude agent, you should run in the other direction! Agents like this run the risk of causing a rift between you and the county–and that could damage your future appeals. There are too many good agents out there; you don’t need to settle for poor representation.
An Extension of you
Ultimately, a tax agent should be an extension of you, decreasing your stress and fighting for reductions. They should handle the entire appeal process and keep you in the loop, while minimizing the burden on you. Hiring the right property tax agent will bring results to you and your property that can make a meaningful impact to your bottom line.
When it comes to service, the difference between good and great is noticeable. Good service fits a need while great service exceeds expectations. Most of us have experienced both good and great service, and I am willing to bet that great service providers stand out to us, while good providers fall by the wayside. This is mainly because great service is much rarer, and we feel its impacts immediately.
A Great Agent is Hard to Come By
There are a lot of good property tax agents in Texas, but not many great ones. This is because the level of service a great agent can provide is often much higher than most groups are able or willing to offer. Great agents visit all the properties they represent so that they can intimately understand their clients’ assets. They also act as an extension of their clients and treat every appeal as if it were their own property being valued. They are considerate of their clients’ needs, expectations, and goals throughout the entire tax year, not just during appeal season.
A great agent also knows when to be aggressive with an appeal and push for a large reduction and when to work with an appraiser to come to a settlement. You can usually identify a great agent by their consistent large reductions and favorable reputation with the appraisal districts they work in. As a result, their clients benefit from lower taxes and elevated reputations in the communities they serve.
The Wayfinder Way
All multifamily property owners deserve great property tax services. To be sure you are receiving great service, download the Property Tax Agent Checklist and evaluate your current provider. If you find that there is some room for improvement, it may be time for a change so you can get the service you deserve.