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.