The deadline to file a property protest is less than 5 days away. What can a property owner do to reduce the tax bill? I recently read a statistics from a so-called property tax consultant claiming that less than a quarter of property owners in Austin who filed their own protest achieved a value reduction. In other words, more than 75% of property owners never got any reductions despite a protest.
The neighborhood I live in is rather uniform in that two primary builders built tract homes with similar square footage and finish out. Yet some houses on my street are worth almost $200K higher than others on the tax roll. That is $5K higher property tax every year!
These neighbors either fall under those 75% category of unsuccessful protests or some of them just flat out never protested. Every year they just let the taxes go up by as high as 10% for a homestead. Over time, the tax bill just snowballed with the compounding effect.
What about those 25% that filed and succeeded? What is it about what they did that is worth to learn about?
I own a few properties and have had the pleasure to deal with both District offices in Williamson and Travis many years in a row. I have always been able to get my appraisals reduced. I have also chatted with a couple of friendly appraisers and became privy to some of their internal evaluation processes.
Here are the top 5 things I believe every property owner needs to know to successfully lower the property tax bills –
1. There is no chance of a reduction without a protest.
Texas Laws protects every property owner from unjust appraisals. There is no filing fees whatsoever with a protest. You can try protest online or set aside a couple of hours to drive down to the Appraisal’s office to present your case. If you simply do not have the time to do so, there are plenty of companies out there that would do it and split the reductions with you. But nothing will happen unless a protest is filed first. This is the single most important step a property owner can take to protect his/her rights.
2. No one knows about your property better than you do.
I have always seen a protest as an opportunity to educate the District about my property conditions and help them arrive at a fair appraisal value.
In one of my informal protests, an appraiser conceded that he had to come up with hundreds of thousands of property appraisals in every tax season. Not to mention he (and every other appraiser) never went inside of anybody’s property.
On the other hand, Texas Tax Codes stipulate rather clearly that the District must consider the property conditions when evaluating property value. So how would the District know you have rusty AC condenser, dead grass, faulty appliances or broken windows if you did not tell them?
I have a rental property that sustained some damages from tenant abuses. I was able to reduce my tax bill by $500 by taking a few interior pictures and getting contractor quotes. The District just added up the contractor’s numbers and reduced my appraisal value accordingly.
3. Let us talk about data.
One line the Appraisal District likes to throw out is “our appraisal process is very scientific!” They would sit you down in front of a large computer screen and flash through all the area maps and sales comps. Just to see all the pictures and hear their fingers clicking through the keyboard was rather intimidating for most of us no doubt.
I like it though when the Appraisal District plays this card. Because when there is data to talk about, there can be a healthy debate. Whenever a protest gets to a standstill, always ask respectfully “how did you arrive at this appraisal value?” then you open the door to a healthy discussion that focuses on data.
First of all, you need to know how the District arrives at property value. Basically, they pull 3 or 4 comparable houses that were sold in the same or adjacent neighborhood (sales comp). Then the District makes some adjustments to get to apples to apples comparison. Adjustments include time (if comps were not transacted near Jan. 1st), square footage/living area, visible structural elements (such as pool, covered porch or any elements that can be captured in satellite pictures or being recorded in the tax records) and location (cul-de-sac vs. busy street).
Depending on the sales comp the District uses, the property value of any given house can swing drastically.
For example, one of my properties got 28% year-over-year increase. I bought it as a foreclosed house in distressed conditions. When I ran the sales comp, I had similar foreclosed houses as part of the comp. When the District ran its sales comp, they filtered out foreclosures and kept only homes in mint conditions. The appraiser declared that “foreclosure is not representative of the overall market” and therefore could not be part of the sales comp.
I had to respectfully called him out during a formal hearing in front of a review panel and cited the decision upheld by the Texas Attorney General since 2012 that “appraisal district must include neighboring foreclosed property when assessing the value of nearby property.”
It was an easy win because I had the data and I armed myself with knowledge with a few Google searches. I also pulled sales comps to substantiate my case. You can get sales comp from Zillow, Trulia, Redfin, a realtor or use the free comparative analysis provided by Best Pro List:
4. Know who you are dealing with.
My protest experiences with Williamson County and Travis County have been night and day to say the least.
Travis County is, for the most part, willing to listen and compromise. The key with Travis is that you need to present valid evidence that helps them build a case in support of your reduction. Help them help you is what it comes down to.
Williamson County, on the other hand, is by far the tougher nut to crack. The appraisers from Williamson County guard their appraisals as if their pay were dependent upon how much tax they collect from you. Every year I go to the Williamson County Appraisal office, I always sense the unspoken and subtle animosity from the appraisers. There was one time they kept me in the informal hearing for 3 hours and had 3 different appraisers running shift to dispute my case.
Over the years, I have learned my best bet with Williamson is to cut to the chase by saying to the appraisers – “I respectfully disagree with you. I’d like to present my case to the formal hearing directly.” It is not worth spending much time talking to someone who refuses to listen. Once you have presented your paper evidence with the appraiser, run as fast as you can to the formal hearing.
5. Leverage the Formal Hearing to your advantage.
When you and your appraiser(s) cannot come to terms with the protest, the next step is to go to a formal hearing with an Appraisal Review Board (ARB).
The ARB is an independent panel comprised of typically three senior citizens. These willing and able volunteers are not hired by the Appraisal Office though they are physically officed there during the protest season. They take great pride in what they do and they listen attentively to your protest, hear the opposing arguments from the District appraisers and then make a judgment on the final property value. I have found the ARB to be rather objective and open-minded.
The first time I made it to the formal hearing with the ARB was after a marathon debate with the appraisers in the informal hearing. When we were finally in front of the ARB, the District appraiser dropped his rather hostile attitude. Much to my chagrin, he voluntarily lowered his appraisal value by more than $40K to where I had originally proposed during the informal hearing. When asked by the ARB if I’d agree with the appraiser’s recommendation, I gladly responded “Yes, Your Honor. I believe that is a fair appraisal value!”
The formal hearing took less than 10 minutes and I saved more than $1K on taxes.
My experiences with the ARB in following years have been largely similar. The ARB respects property owners that can present a protest in a succinct manner packed with evidence and supporting arguments.
The deadline for filing a protest for 2016 in Travis County is May 31st. Leverage this as an opportunity to educate the Appraisal District the true value of your property. File a protest consistently every year. Over time, you will see a huge difference on the tax roll between your house and your nextdoor neighbor’s.
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