Should I File A Noticed Value Protest?

Do Your Due Diligence

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.

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How Much of My Time Will a Protest Take?

The answer depends on the course you take

A Fork in the Road

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.

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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.

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What is A Central Appraisal District?

The Central Appraisal District’s Role

In Texas, Central Appraisal Districts (CADs) are in charge of determining market value for both real and personal property within their jurisdictions. They generally release these values to the public and their taxpayers at some point around May each year. These values are pivotal in the functioning of a county because they will be the basis for establishing the upcoming year’s tax rates that will help fund county and municipal functions for the next year. Despite the appearance of this role, it is important for taxpayers to understand that their local CAD does not set or control tax rates. Moreover, the CAD does not collect taxes or issue tax bills. Their sole job in the taxing process of a county is to set taxable values on taxpayers’ properties.

CAD’s Role in the Appeal Process

An important part of the CAD’s function in government is working with taxpayers each year to establish accurate values for property taxation. This is achieved when taxpayers appeal their noticed value sent by their local CAD. Once filed, these appeals can primarily end in one of three different ways; 1) the taxpayer ultimately withdraws their protest, 2) the CAD and taxpayer settle on a value for the property, or 3) the CAD and taxpayer can not agree on a value and must go to an appraisal review board to determine the value of the property. Following these appeals, the CAD will finalize any changed values into the tax roll.

CAD’s Role after Appeal Process

After the appeal season concludes, the CAD’s valuation cycle begins again for the following year. The CAD office will start collecting data on the market and start to shape its mass appraisal methodology. If you have any questions about the CAD’s role in determining your multifamily property value, please reach out to one of our Texas multifamily specialists for answers and guidance.

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Should I File A Noticed Value Protest?

Do Your Due Diligence

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 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 value you believe you can secure. Multiply that number by the most current tax rate used for your property 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 an eye on the value in future years and file an appeal when the property does become significantly overvalued.

That’s really all you need to do when deciding on filing a protest. Examine your market to see if an appeal can 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.

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How are Appraisal Review Board Members Appointed?

Appraisal Review Boards

If you own property in Texas and have ever appealed the noticed value, you most likely have dealt with an Appraisal Review Board (ARB). These ARBs handle valuation disputes between taxpayers and Central Appraisal Districts (CADs) by holding hearings where both parties present evidence and support for their valuation. At the conclusion of these hearings, ARB board members issue a decision and can change the market value of a property if they find it appropriate. Typically, an ARB hearing will consist of three to five board members from a larger pool of active members that varies in size depending on the size of the county.

Selection of ARB Members

Now that we understand the role an ARB plays in setting property values, the question that often seems to pop up in peoples’ minds is “who are these ARB members and how are they chosen to sit on the board”? This is an important question which is easily answered. For starters, there are no special requirements for ARB members to be on the board other than they must be a resident of the appraisal district for two or more years before taking office. This requirement is universal throughout all of Texas. While there are certain rules that restrict an individual serving on the ARB panel, they primarily depend upon conflicts of interests from serving rather than the potential board member’s knowledge or experience in appraisal work. However, who gets to choose and approve these members depends on the population of a county. If a county has a population of 120,000 or more, ARB members are appointed by the local administrative district judge. Alternatively, if a county has a population of less than 120,000, the board of directors for that county appoints the ARB members.

If you have any more questions about your local ARB board and its operations, please contact one of our Texas multifamily property specialists today for information.

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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. 

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