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.
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.