Protest of Taxable Value and The Impact on A Property’s Sale Price

Will filing a protest affect the sale price of a property?

Some property owners worry that reducing the taxable value of their property will ultimately hurt the potential sale price of an asset in the future. Their concern is that the taxable value of the property is evidence of the true value of the property and will result in a lower sale price following a reduction. This is not the case, and these concerns should not stop a property owner from filing an appeal of their property’s noticed value. If anything, a successful appeal will actually increase a property’s future sale price since the tax burden of the property decreased.

Independent Appraisals

When a county appraisal district (or an appraisal review board) works with a taxpayer to set the market value for a property, it is with the intent of finding the value that all sides believe to be reflective of the value the asset would exchange hands on an open and free market. However, appraisal districts and appraisal review boards are often burdened with so many other properties to value that this type of appraisal is often not terribly deep or encompassing. Moreover, negotiations between taxing districts and taxpayers can skew values one way or another for the sake of settling appeals. The appraisal communities recognize and understand these types of appraisals and generally take them with a grain of salt.

Appraisals done by parties looking to sell/buy assets perform appraisals independent of appraisals done by taxing jurisdictions. The main reason for this is that these parties will typically have more information than the appraisal districts and much more time to value the individual asset. As such, they can take the appraisal to a much deeper (and in their opinion), accurate level. These separate appraisals often result in much different values.

What does this mean for owners wanting to sell their assets and appeal their property value?

Ultimately, because appraisals for taxing purposes are independent of appraisals for sales/loans, taxpayers can work to reduce their tax liability without much concern of boxing themselves into a lower sale price for an asset. If you are looking to pursue a reduction to your taxable value, please reach out to our Texas, multifamily specialists.