Top Ten Property Tax Tips for Homeowners
Make sure you have any homestead exemptions for which you qualify. The regular homestead exemption is available to anyone.
The requirements are simple:
- you must own the house on January 1 AND
- it must be your primary residence.
There are even better exemptions for those over 65 and the disabled. Veterans who have a 100% disability based on a service-related incident receive a 100% exemption and pay no property taxes for their homestead.
You do not have to be taxed out of your home of you are over 65 and can’t afford the property taxes. You can defer the property taxes as long as you live in the house, and even longer in special circumstances.
Check the appraisal districts information for your home. Many appraisal districts use aerial photography to “inspect” property. Appraisal districts are required to inspect properties every three years but in practice they inspect property much less frequently. This means the appraisal district’s information on your house is likely not accurate.
Five critical factors to check on the appraisal district’s records for your property are: 1) grade (quality of construction), 2) condition, 3) effective year built, 4) level of remodel and 5) building area. Appraisal districts tend to double count the atrium area by measuring the perimeter and multiplying by the number of stories. Be extra vigilant regarding the size of your home if you have an atrium.
Appraisal district’s use the cost approach to value for houses. Professional appraisers generally do not consider this the best method to value houses. It is more prone to error. Further, appraisal district values for land tend to be low, so they overstate the value of improvements to hit market value. This convoluted valuation model is accurate within 10% of actual value only about half the time.
Texas law requires you file a protest to get the appraisal district’s evidence regarding your house. You cannot get the sales data that will be considered at a hearing unless you file a protest. At least half the time the appraisal district’s sales data supports a reduction in value.
You can protest your property taxes based on excessive value and unequal appraisal. Excessive value is when the tax value exceeds market value. Unequal appraisal is when your home is assessed higher for property taxes than similar homes.
The tax appeal process includes an informal hearing (one-on-one with an appraiser), appraisal review board hearing (panel of three citizens who hear the appeal) and either binding arbitration or litigation.
Most property tax appeals are successful. Most of the appeals result in a reduction at the informal hearing. In 2015, 69% of appraisal review board appeals (second step after informal hearing) generated lower property taxes for the property owner.
Protest every year for three reasons:
- the appeal process is arbitrary and you do not know if you will get a favorable or unfavorable appraiser until the hearing,
- the appraisal district’s evidence typically supports a reduction,
- annual appeals generate a 13% reduction in property taxes each year, for those who had appealed five or more consecutive years.
The 13% reduction is based on a study by O’Connor & Associates of 43,000 homes in Harris County that had been appealed five or more years consecutively. The average savings was $653 per year.
If you file a property tax appeal, the appraisal district will make a serious attempt to settle the appeal at the informal hearing due to the volume of appeals and the limited time frame to settle them. Simply filing the appeal and appearing for the hearing means you will likely reduce your property taxes.
If you would like to find out if your property is over-assessed, visit the Free Fairness Checker. You only need to enter your property address and you will find out if you are being taxed fairly or not. If you aren’t happy with the results, go ahead and file an appeal yourself or sign-up online so we can protest your property taxes for you.
Questions? Call us at 800.270.2720.