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A guide written by attorney Justin Till.
Have you been hit with a larger-than-anticipated tax bill due to an increase in your residential property valuation? If so, you are not alone.
Fortunately, there are a number of different ways to protest your property valuation based on what state you live in. In fact, according to the Texas Comptroller, the ability to do so is one of your most important rights as a taxpayer. In this guide, we'll go over how to protest the appraised value of properties in Texas in 2022.
If you have questions about how to protest your appraised property value, contact the team at Lyda Law Firm today to see how we can help.
The method of calculating and collecting property taxes to fund local governments is conducted in four general phases: Appraisal, Equalization, Assessment, and Collection. This guide will focus on Equalization, which is the phase in which property owners protest the Central Appraisal District (CAD) appraisal of their properties.
CADs are overseen by a Board, members of which are appointed by the governing bodies taxing entities that lay wholly or partly within your County. This Board appoints a Chief Appraiser who is responsible for hiring professional appraisal staff or contractors to perform the actual appraisal of your property.
Those appraisers develop your appraised value utilizing one of two methods prescribed by state statute enacted by the Texas Legislature. Regardless of the method used, your appraisal is required to be fair and equitable. This means, in general terms, that your property must be appraised based on its own characteristics and its location.
This brief guide is meant to give property owners a high-level overview of this system while providing a method to gather evidence, build a case with that evidence, and effectively challenge the Central Appraisal District’s determination of your property’s value – resulting in a lower tax burden than you will face without a successful protest.
Here we note that the tax burden you will be responsible for paying depends on factors outside the appraisal protest process, including tax rate increases made by local governments, establishment of new local governments by local option or state legislative action, and large appraisal increases which are founded in reliable local market data to which there is no effective challenge.
Let’s get started.
CADs appraise properties at their market value on January 1 of the appraisal year. Most property owners receive a Notice of Appraisal informing them of their new appraised value, but you do not need to receive such a Notice to protest.
If no protest is lodged, this appraised value becomes final and taxable. Property owners generally have until May 15 or 30 days from the date of the notice to contact the CAD with notice of protest. Some counties have online notice of protest web pages where the process is conducted entirely online. Others require a phone call or return of a paper form included in the Notice of Appraisal to trigger the protest process.
Request from the CAD all documents and data used in their appraisal of your property: Appraisal Card, Neighborhood Map & “Comp” homes (sales or otherwise), market data, and any other information they have used.
There are a number of valid reasons you may have to protest your property valuation. Here's a breakdown of the various grounds you might use to protest your residential property appraisal value.
Regardless of the county’s preferred medium, your notice of protest should be sent to the CAD with either a “Market Value Protest” or an “Unequal Value Protest” selection (or both) made on the notice form provided to you.
An “Unequal Value Protest” argues that the state law requirement that the appraisal ratio of your property be equal to or less than the median level of appraisals for a sample of similar properties in your county and neighborhood. Unless you live in a subdivision with cookie cutter homes on cookie cutter lots, this approach is difficult at best. Those wishing to pursue this approach should consult an attorney or experienced property tax consultant prior to filing your protest notice.
The Market Value Protest gives property owners a wider selection of criteria to build their protest case and will be our focus here.
Each property is assigned to a “neighborhood” for property tax purposes, usually a compact set of residential homes, commercial areas, large-tract rural and semi-rural properties, and other similar groupings.[i]
The CAD typically chooses homes in your neighborhood as the “comparison homes” that your property is measured against for appraisal. Furthermore, if 10% of the properties in your “neighborhood" sell over a three-year period, your value will undoubtedly increase.
First, make sure your assigned neighborhood is appropriate. If, for instance, your property is outside of a gated subdivision but is included in that subdivision’s CAD-designated “neighborhood”, argue that your home has little in common with homes in the subdivision and does not benefit from its unique attributes, facilities, exclusivity, and infrastructure – and therefore you should be assigned to a more similar “neighborhood” with lower valuations.
Next, assess the improvements on your property. These are the house itself along with any outbuildings, garages, pools, decks, and other appurtenant structures.
Look to the appraisal card or the diagram of your home to make sure there are no inaccuracies in square footage or layout/floor plans. Additionally, make sure that any outside areas such as a covered porch are appropriately categorized as such.
Many counties use drones to capture images of your home from above, calculating square footage of entire neighborhoods in a mass appraisal model. Occasionally, they fail to notice that a certain portion of the roof footprint is a fully roofed porch, which inaccurately adds livable indoors space to your home and artificially increases your appraised value.
The same is true of outbuildings, which may at times be assumed to be Accessory Dwelling Units (ADUs) or “barndominiums” with built-in living quarters when they are in fact well-houses or simple barns and sheds.
If you see any defects, wear and tear, needed repairs, outdated appliances (included HVAC and water heater), plumbing or wiring, cabinets, flooring or other attributes, or any other specific items that you believe would give a hypothetical homebuyer reason to hesitate or negotiate the sale price downward, you have identified a useful piece of information to help build your case.
Each defect or needed improvement can be assigned a cost[ii], and those costs can be added up into a final “depreciation” number that you can convince the CAD to subtract from your appraised value.
For instance, if your home needs the following:
$579.57 Water heater outdated, failing.
$1,200.00 Electrical wiring out of code.
$854.00 Kitchen tile from 1979, outdated.
$1,000.00 Back patio concrete cracked.
$2,400.00 Three bathrooms outdated fixtures/tiling/hardware.
You could argue that your appraised value should be reduced by:
$6,033.57 Total Needed Repair/Upgrade Costs (Depreciation).
Remember that January 1 is the date of appraisal, so any repairs or upgrades you have made since that date can be claimed as a depreciable cost as well. Keep those receipts and include them in your case file.
It is also important to note that you are, in fact, trying to present your home as an inferior property, an absolute dump of a house, almost impossible to restore to a respectable state of human habitability – the exact opposite of what you would do if you were showing your home to a prospective buyer. Show the CAD appraisers every flaw you can find.
In addition to the physical defects identified, evaluate the more abstract attributes to your property. These might include:
Be sure to address all of these by cost. This may require that you consult with any number of specialists to find a reasonable calculation, but the final total estimated cost may be used to argue for a lower appraisal dollar amount similarly to the physical tally of improvement costs noted above.
Foreclosures, oversupply of properties, undersupply of properties, homebuying sprees, building sprees, and other broader economic phenomena should be considered as well.
Keep in mind when reviewing these factors that sales and comp homes used by the CAD to justify your appraisal cannot be homes that were sold by highly motivated sellers or bought by highly motivated buyers.[iii] If, as sometimes occurs, a new Oil Boom strikes the Permian Basin, and the market does not provide for adequate housing of the incoming workforce, each seller is highly motivated and each buyer more so. These unnatural economic pressures are irregular, and you should demonstrate that the unnatural market has led to unnatural sale prices that should be disregarded in evaluating the value of your home.
The same is true on a granular level. If your community has very little housing inventory open for purchase, but a new resident’s job depends on him/her finding a home to take a new high-stakes, high-paying job, that person may throw tens of thousands of dollars above any reasonable market price to a property owner just to lock down the property quickly move in. That sale price should be disregarded as well.
Now that you have an idea of the possible grounds for protest, we can take a deeper dive into the actual process.
Your local CAD may begin with informal review of your case file, which you have submitted alongside your Notice of Protest unless the CAD directed you otherwise. Here, you speak with a CAD staff appraiser and outline everything discussed above. The appraiser may also provide additional information or comments, so take note of what you hear as it may be useful if you fail to reach an agreement at this first round of talks.
The appraiser will take some time to consider your case and come back with a rejection or an offer. You may accept the offer and sign a waiver and agreement codifying your lowered appraised value.
Note that you should take a moment to consider the offer, making sure that you understand that you may be walking away from a $10,000 reduction in appraisal (which may translate into ~$300 in tax reduction over a $1,000 disagreement that amounts to just ~$30 in taxes.
If you take the offer, the process is over. However, if you do not, your next step (depending on local preferences) is the Appraisal Review Board (ARB) hearing.
You will receive a packet[iv] containing the Taxpayer Rights and Remedies information required by state law, a set of procedures governing the ARB hearing, all the information pertaining to your right to receive copies of every relevant document that the ARB plans to introduce at the hearing.
Assemble your case file and print (or thumb drive/CD/email, at ARB/CAD’s preference) four copies to bring with you. This case file should at this time include a summary page, appraisal notice from CAD, the CAD appraisal card, all of your photos, estimates, receipts, quotes, neighborhood map, comps and sales, and any math you’ve done on either cost of repairs/upgrades or square footage cost comparisons.
At the hearing, which lasts twenty minutes in most cases, the three-member ARB (joined by a CAD appraiser/clerk recording the proceedings) will swear yourselves in and you will be invited to present your case. Keep it brief, concise, and focused on your best talking points. You should point out you highest-dollar reductions in value, point out any offer for reduction made by the staff appraiser at your first meeting, and engage in any questions the Board may have. Remind the Board that state law requires that your property be appraised on its individual characteristics[v] and note that CAD has the burden of proving its appraisal of your home by a preponderance of the evidence[vi] presented.
The Board will deliberate and may either reduce the value or leave it as it was on your initial Notice of Appraisal. They are not bound to honor the CAD staff appraiser’s earlier offer, but they are also not permitted to increase your value above the initial amount given in the Notice of Appraisal. Their decision will be sent to you by certified mail within 30 days, along with information on pursuing additional negotiations through binding arbitration or by filing suit in state district court.
Arbitration generally costs between $450 and $1550, depending on the initial value of the property, and must be requested on a form prescribed by the Texas Comptroller of Public Accounts within 60 days of the ARB Order. The homeowner should do additional research, gather information from and encourage protests and continued appeals by neighbors, and invite buyers, sellers, agents, private appraisers, attorneys, and other professionals to build a stronger case than what you have already developed.
You will receive another round of information ahead of the arbitration date, which will be scheduled at a time agreed to by you and the CAD. You make your respective cases and the arbitrator delivers a copy of the decision to the parties within 20 days. If the award granted is closer to the value you estimated, the Comptroller refunds all but $50 of the deposit amount described above and the CAD pays the arbitrator’s fee. Whether the amount is lowered or not, the arbitrator’s decision is final and binding on all parties.
Any action taken in district court must be drafted and filed by an attorney. Should you wish to pursue this litigation, consult with a Texas-licensed attorney.
This guide is meant to aid the average homeowner in protesting their appraisals and does not cover any number of complicating factors that may affect some residential homesteads that trigger other important legal and tax-related considerations. These may include:
For owners of these properties, specialized attention from a qualified tax advisor or attorney is warranted.
Still have questions about Texas property appraisals in general or whether and how you might be able to protest the appraised value of your residential property? Contact Lyda Law Firm today to discuss your case and see how we can help.
Lyda Group is a group of companies on a mission to democratize the law. Lyda Law Firm provides high-quality legal services for startups/small businesses, nonprofits, and moderate-income individuals. Lyda Strategies provides adept lobbying and political consulting services to mission-driven clients. Our nonprofit, Causes to Care About, mobilizes lobbyists to fight for social change through private donations.
Justin Till is a Texas-licensed attorney who provides high-quality, client-centered service. Justin offers representation to address client needs in a variety of litigation and transaction matters. In addition to his work for small businesses and moderate-income individuals, Justin is a practicing ethics attorney, advising campaigns, legislators, political committees, and others on ethics compliance and campaign finance law.
Before joining Lyda Law Firm, Justin spent a decade working in the Texas House of Representatives, most recently as Chief of Staff and General Counsel to Representative Greg Bonnen. Prior years were spent on the staffs of Representative Drew Darby, Congressman Quico Canseco, and several campaigns and political party operations throughout the state.
Justin’s experience in the House focused primarily on the appropriations process, with each of his five terms spent on the Appropriations Committee and each of its subcommittees. Additional legislative experience includes economic development and tax legislation, civil jurisprudence reforms, federal-state program coordination, and medical/insurance policy. With this extensive public policy background, he also serves as a consultant at Lyda Strategies LLC.
A 7th generation Texan and native of the Permian Basin, Justin is a graduate of Angelo State University (B.A. Government) and St. Mary’s University School of Law (J.D.).
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[i] See, Texas Tax Code §25.18(b).
[ii] Homeowners may either hire contractors to provide quotes on needed repairs and upgrades or use a commonly accepted home repair website like Homewyse.com to get a quick and easy estimate to present to the CAD.
[iii] Per Texas Tax Code §1.04(7), “Market Value” is the price at which a property would sell under prevailing market conditions if:
[iv] Texas Tax Code §41.461 requires that the ARB/CAD deliver these materials to you at least 14 days prior to the date of your hearing. They are not allowed to add to this packet after it is presented to you. Any additional evidence you request leading up to the hearing (which you may) must also be provided to you 14 days prior to the hearing, or the ARB/CAD may not use that evidence in the hearing.
[v] See, Texas Tax Code §23.01(b).
[vi] See, Texas Tax Code §41.43.
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