Posts Tagged: property tax protest

4 Reasons to Appeal

Appealing Your Proposed Value

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.

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Important Terms to Know Before You File a Protest

Importance of Understanding Terms

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.

Key Terms 

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.

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What are the Benefits of Filing to Litigation?

What are the Benefits of Filing to Litigation?

How can I get my Appeal to Litigation?

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.

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Obsolescence In Real Property – How Can It Affect My Value?

Obsolescence in Real Property:

How Can It Affect My Value?

What is Obsolescence?

Obsolescence is defined as “the process of becoming obsolete or outdated and no longer used.” Obsolescence can impact a multifamily property in many ways to lower the property’s value. Both owners and appraisers should be aware of any potential obsolescence at play when evaluating a property’s market value.

Types of Obsolescence

There are three main types of obsolescence that can play a role in a multifamily property’s value: 1) Functional, 2) Economic, and 3) Physical.

Functional Obsolescence 

Functional obsolescence deals with the function of the property and how, generally over time, the property’s original function is not as useful. For example, consider an older building constructed without elevators at a time before modern elevators were common. When the building was new this would have been perfectly normal. However, if that same building still existed today, it would have functional obsolescence because we expect elevators in apartment buildings with 3+ floors.

Economic Obsolescence 

Economic obsolescence is often the most frustrating for an owner because it is always an external force impacting the property outside of that owner’s control. A great, and timely, example of this type of obsolescence is COVID-19 and the impact it had on our economy. Many businesses had to either shut down or suspend activities causing financial hardship on many families. With little cash coming in during the peak pandemic months, families often could not pay their full (or any) rent owed to multifamily property owners. This external impact on the income a property could generate is a textbook example of economic obsolescence.

Physical Obsolescence 

Physical obsolescence is probably the most easily avoidable of the three types of obsolescence. Physical obsolescence is often brought on due to deferred maintenance that causes damage or accelerated deterioration of an asset. A good example of this would be not replacing a roof in a timely fashion, and then having extensive water damage throughout the property years later that would require extensive work to fix. This physical obsolescence lowers the value of the property.

While obsolescence is not always easy to spot, both property owners and the appraiser should be diligent in looking for its impact on a property’s market value.

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Can I Appeal My Texas Property Taxes On My Own?

Can I Appeal my Texas Property on My Own?

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.

Pros

  • 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

Cons

  • 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.

How Does the Tax Appeal Process Work?

Notice of Value: The Start of an Appeal

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.

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How Can I Prepare For a Site Visit?

How can I Prepare for a Site Visit?

The Importance of Site Visits

It is truly impossible to overestimate the importance of site visits. For a tax agent to adequately represent a property, they need to have firsthand extensive knowledge of the asset. Without this knowledge, a property owner can never receive top-tier representation. As a property owner, there are a few preparations you should make before your site visit with your tax agent.

Step 1: Inform Your Staff of the Visit

For a site visit to go smoothly and effectively, the staff at the property needs to be aware of the tax agent’s visit. Moreover, the staff responsible for meeting with the agent must be knowledgeable and completely honest. A good agent asks hard questions for managers/owners to answer, and they need truthful responses. If the property is slipping off its foundation, the agent needs to know. If the property has plumbing issues every other day that require water to be shut off to the property, the agent needs to know. If the property has extensive water damage from leaky roofs, the agent needs to know! Your agent needs to know all the good and bad with your property so they can adequately fight for a fair valuation.

Step 2: Provide Financial Information

Next, be sure to prepare and provide your agent with the profit and loss statement for the property as well as unit statistics/rent rolls. As multifamily properties are income-producing, the ability of a property to produce income plays a significant part in its valuation.

Step 3: Be Prepared to Show a Vacant Room

So they can see what a unit looks like, be prepared to take your agent to a vacant unit. A good agent will want to examine the condition of the unit, its flooring material, countertops, appliances, and everything in between. All this information can play a crucial role in valuing your property. Note, however, that you need to show your agent a unit that is representative of the majority of the other units at the property. For example, if 90% of the units at the property have granite countertops, do not show your agent the unit with a Formica countertop.

And that’s it. Preparing for your site visit is quite simple and should make your visit that much quicker/effective. By following these simple steps to prepare for your visit with your agent, you are setting your appeal up for success.

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How Much Can My Texas Multifamily Property Value Increase?

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.

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Why Should My Agent Visit My Multifamily Property?

Why Should My Agent Visit My Property?

The Impact of Understanding an Asset

As a multifamily property owner, do you or your company often purchase new properties without seeing the asset in question? Most likely, that sounds like a terrible idea to you. Understanding what it is that you are buying and going to operate is a pivotal component to owning and managing a multifamily property. Due diligence is required to not only understand the risks of an asset but also the benefits. You cannot fully understand the impact a property will have on your portfolio without visiting that property, walking its grounds, and analyzing its condition through your own eyes.

The Impact of Understanding an Asset

The same can be said about the property valuation of an asset. Tax agents are asked to step in and help frustrated owners secure a fair market value of their properties. Owners are often rightfully worried about over taxation and rely on their agents to be their advocates. But, just like a prospective property buyer, how can a tax agent accurately understand the risks and benefits associated with a property without visiting it? They cannot. The understanding of an asset accompanied by a site visit cannot be duplicated through google images and satellite views of the property. It comes from feeling, touching, and seeing the asset firsthand. This lack of ability or unwillingness to visit properties that agents represent ultimately ends up hurting the taxpayers these agents swore to protect.

Advantage Over Taxing Jurisdictions

In addition to providing a better understanding of a property to a tax agent, site visits allow a bit of an advantage to agents and taxpayers when dealing with Central Appraisal Districts (CADs). CADs are often understaffed and overburdened to produce accurate values of the properties within their taxing jurisdiction every year. This means that CADs rely heavily on “mass appraisal techniques” to meet their offices’ responsibility to taxpayers. The problem with this approach is that CADs are unable to get into many details when dealing with a specific property. That is where an advantage for the taxpayer presents itself. The county may not know that your property had five downed units this past year, or that a natural disaster destroyed a portion of the property or any other number of events/characteristics that affect the asset. These are likely not reflected in the valuation. It is the duty of the tax agent to know those issues and present them to the CAD for revaluing the asset. Without those site visits, agents are willfully abandoning an additional tool they have to help their clients.

Evaluate Your Current Agent

If you have never seen your agent at your properties, it is time you demand it from them. The communities you serve and have built deserve to not have resources taken from them due to over-taxation. Challenge your agent to put you and your communities’ best interest first by requiring they visit your properties today.

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How can the Right Property Tax Agent Simplify My Life?

How can the Right Property Tax Agent Simplify My Life?

Increased Results, Decreased Stress

Extending Your Reach

Tax agents may seem like they are a dime a dozen, but if you want a tax agent to simplify your life, you need to dig a little deeper.  Tax agents come from a wide array of firms, experiences, locations, reputations, and client experiences.  It is important to ask yourself what you are looking for in an agent?  Do you want someone you have to constantly check on to make sure they are meeting the deadlines?  Do you want to feel like they are just another person you must supervise?  Or maybe, your agent cuts you out entirely, doesn’t give you updates until you beg enough, and then only tells you about their successes while leaving out all your other properties. 

 From my experience, that is not usually what a client wants but it is often what they get when they hire the average tax agent.  It is easy to see why an agent who cuts you out or needs your constant monitoring would not simplify your life.  It could even seem like more work to hire an agent, after all, if you need to monitor everything why not do it yourself? 

 If you feel burned out from previous agents, I’m sorry to hear that.  An agent should extend your reach.  Allowing you to do more with your limited time.  The right agent figures out a customized plan with you for how and when you want reports so that you don’t need to ask.  They don’t make last-minute requests, causing you to drop everything to answer in time.  And they certainly don’t need you to remind them of deadlines.  If anything, it should be the reverse where you are being reminded by them because you are so confident they have your back that you can move on with other responsibilities.

Experience

The right tax agent will also simplify your life by having experience in your property type.  They will be a specialist, not a jack-of-all-trades.  They will know the best valuation approaches for your property and market and will use them to secure you the best possible reductions.  A large part of experience comes from visiting your properties and the local market.  Actual boots on the ground, asking the right questions and documenting the right facts.  If your agent is too overburdened to visit your property, then they are missing a critical piece of the valuation puzzle.  They may secure you a reduction, but it’s like slinging mud against the wall to see what sticks.  

Results

The right specialist tax agent will deliver you the best results possible.  Does that always mean a reduction? No, an agent can’t guarantee a result.  But, if they have done everything they should be doing, they will come to you and let you know the results with confidence.  Knowing they left no stone unturned, and no argument omitted.  The results of a specialist in your property type are usually better than the average agent and that can give you confidence when you report the results. 

A tax agent may not simplify your life, but the right specialized tax agent will.  If you are tired of begging for reports, supervising your agent, or only getting part of the story, it sounds like it may be the perfect time to reevaluate your agent and find the right one to simplify your life!  

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