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Property Tax Appeals can Result in Significant Savings

Property tax appeals are an opportunity to challenge the appraisal district’s estimated value of your property. Since appraisal districts are required to value property at 100 percent of value, about half of the 1.8 million parcels in Harris County are over-taxed.

Appraisal districts use mass appraisal to value property and are not able to inspect every property. In Harris County, most inspections are done using Pictometry, an aerial photography service.

The appraisal districts are immensely understaffed relative to valuing Texas properties. The 254 appraisal districts have about 2,400 full-time appraisers to value the almost 19 million properties in Texas, based on Texas Comptroller 2015 data. This equates to 8,000 appraisals per year per appraiser, or 30 appraisals per day.

Appeal market value, unequal appraisal

Taxpayers can protest on market value (excessive value) and unequal appraisal. Appraisal districts and appraisal review boards will only consider matters protested. Those who appeal only market value, but appear with evidence on unequal appraisal, will be denied a hearing on unequal appraisal.

Homeowners can appeal annually, regardless of whether the value increased, decreased or remained the same.

An appeal (or protest) on market value is termed “over market” or “excessive appraisal” on the property tax protest form. Unequal appraisal is simply the “value is unequal with other properties.”
It is advisable to choose both since you have limited information when you file the protest.

Be sure to request to “inspect and obtain a copy of the data, schedules, formulas and all other information the chief appraiser plans to introduce at the hearing” with the protest. Appraisal districts are required to provide this information upon request based on Tax Code 41.461.

This simple request will require the appraisal district to provide their evidence 14 days in advance of the hearing providing time for research and analysis. The appraisal district’s evidence typically includes at least three categories of information: record card, comparable sales and unequal appraisal.

Appraisal district evidence

The “record card” is the appraisal district’s file on your property as they track over 100 fields of data. However, since they rarely see the outside of your home and almost never see the interior of your home, they have limited information about your property.

This provides appraisal district appraisers an opportunity to correct errors in the description of properties. Texas appraisal districts tabulate data on 38 million parcels with the almost 2,400 appraisers. Appraisal districts are usually within 10 percent of market value half the time.

However, with a low amount of appraisers to value almost 40 million properties, there is opportunity for people to discuss the specific case.

Comparable sales

The comparable sales will likely be for the “neighborhood,” as defined by the appraisal district, while taxpayers can benefit from comparing their house and the neighborhood sales.

Texas is a non-disclosure state for sales prices which makes them difficult to obtain.

Small number of appeals

The aggregate data for Texas tax assessment and appeals is surprising. Out of 19 million total parcels, there were only 1.3 million with appraisal review board appeals in 2015. It is not generally understood that half of the 19 million parcels are over-valued based on statute.

Appeal process

Annual property tax appeals minimize property taxes due to the arbitrary nature of the appeals process. Texas property taxes generate about $60 billion in annual taxes. It is not intuitive that a system of taxation that raises substantial revenue should require annual appeals.

However, limited resources at appraisal districts and the state mandate for valuing property market value, making it difficult for appraisal districts to accurately value 19 million properties.

The appraisal district is expected to be over-valuing your property half the time, since they are required by statute to value property at market value.

Basis for appeal

The arbitrary nature of the appeals process is not intuitive. In some years, there is no reduction, even though the evidence clearly supported a reduction. In other years, despite ambiguous evidence, the taxpayer obtains a favorable reduction.

The issue is that the appeals process involves appraisal district staff who have preferences, and these preferences influence the results of informal hearings and appraisal review board hearings.

Meaningful savings

Taxpayers who appealed for five or more years consecutively achieved annual savings of $653. Those who appeal irregularly will obtain limited results.

However, those who appeal annually will achieve meaningful results, such as a 13 percent savings in Harris County, based on O’Connor’s recent study of 43,000 properties. Annual property tax appeals can generate meaningful savings for homeowners.

Blog Author

Patrick O’Connor, MAI, Owner and President
Patrick O’Connor has been active in reducing property taxes, providing expert witness testimony and appraising commercial real estate property since 1983. Pat is active in publishing analyses and data with respect to the real estate market, while being a highly regarded media spokesperson for the real estate community. He holds a MAI, the highest achievable designation from the Appraisal Institute, and is a licensed senior property tax consultant. Pat earned a Master of Business Administration from Harvard University. In 2001, he authored the first definitive consumer guide to Texas property taxes, Cut Your Texas Property Taxes.

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