Texas property taxes are substantial. Just ask someone who has recently moved to Texas from California. They are pleasantly amazed by Texas' affordable cost of housing. You can buy a mansion in Houston for the cost of small, plain house in Los Angeles. However, when they learn the amount of their annual property taxes, they are often shocked to the point of disbelief. They are similar in function to the income tax in many states. Of course, Texas does not have a personal income tax. (It would take a constitutional amendment approved by a vote of the citizens of Texas to approve a personal income tax for Texas.) Texas property taxes are one of the main funding sources for local government including schools, cities, counties, municipal utility districts, and community college districts.

Texas property taxes can be appealed. In fact, the property tax appeal rights in Texas are relatively evenhanded compared to many states. (In New York, you have to send a $25 fee, and all the evidence to document your claim when you file your property tax protest.) Most (about 75%) of Texas property tax appeals are successful. Property taxes are one of the few types of taxes which can be appealed based upon subjective criteria. (If you don't believe this, try calling the IRS and asking to appeal because it seems your income taxes are too high.)

I believe it does make sense to appeal Texas property taxes annually. Appealing annually will tend to keep your assessed value (and thus your property taxes) in the lower quartile of the range. There's an incredible range for assessed values for Texas properties. For example, a recent review of apartments assessed by Harris County Appraisal District in the Gulfton submarket revealed values ranging from $10 per square foot to $40 per square foot. The range of assessed value for single-family houses is less extreme. However, relatively homogeneous houses often range by 10 to 20% in value for no apparent reason. If you annually appeal property taxes, you have an excellent probability of keeping your property in the lower quartile of the range. It will take about three to five years to move it to that level.

The iterative nature and somewhat arbitrary components of the Texas property tax appeal process, and the ability to appeal on unequal appraisal make appealing property taxes annually efficacious.

The protest for the current year's property taxes depends partially upon the final results achieved in the prior year. If the prior year's assessed value was not appealed, the base level for this year's appeal will be somewhat higher. For example, let's assume a house was assessed at $200,000 last year and noticed at $220,000 this year. At the informal hearing, the appraiser might suggest adjusting the value to $205,000. His comment might be it is somewhat higher than last year's value, but not by much.

However, if you'd appealed the prior year's value and reduced the value to $190,000, the result might be different. Instead of proposing $205,000, for this year's value, the appraiser may well have suggested $195,000. The iterative nature of property tax appeals is the primary reason to appeal annually.

(Appraisal district staff often takes the position that "each year stands on its own". They most often cite this position when asked how it is possible that a value could've increased by a huge percentage in one year. The taxpayer's position is sometimes that perhaps an increase is appropriate but certainly not a 50% increase. The appraiser's response might be that "each year's value stands on its own. Perhaps you just got a bargain last year".)

The appeal process has a human factor, which makes it inconsistent and somewhat arbitrary. There are actions which could reduce the level of variability at the informal hearing and the appraisal review board hearing. For the most part, they include more training and a higher level of supervision. For the appraisal review board, having an internal governance mechanism would likely produce a more consistent results.

At the informal hearing, you may meet with someone who is flexible or inflexible regarding resolving the appeal. Similarly, at the appraisal review board hearing ("formal" hearing) you may present your appeal to a panel which is relatively friendly to the property owner or relatively friendly to the appraisal district. Both types of appraisers and appraisal review board panels exist. By appealing annually, you increase the chance of meeting with appraisers and appraisal review boards which are receptive to reducing your assessed value.

The option to appeal based on unequal appraisal is another excellent reason to appeal annually. An appeal on unequal appraisal requests property tax relief based upon your property being assessed unfairly relative to similar properties. You can produce a legitimate presentation regarding unequal appraisal unless your home's assessed value is in the bottom five or 10% of homes in your neighborhood. The statute regarding unequal appraisal does not require you to obtain an objective sample of properties within the neighborhood. It simply requires that you compile "a reasonable number of comparables appropriately adjusted".

In Texas, the appraisal review board shall reduce your assessed value unless the appraisal district documents that you are equitably assessed by a preponderance of the evidence presented at the hearing. The option most frequently chosen for appeals on property taxes is "a reasonable number of comparables appropriately adjusted".

Finally, it is your right to appeal annually and it is your money. I believe many people do not appeal because they are not aware their appeal will likely be successful. However, Texas homeowners and other Texas taxpayers have an absolute right to appeal their property taxes annually, whether they're assessed value increased, remained unchanged or decreased.

It is my firm believed that each taxpayer can spend their money better than the government. I had yet to meet a taxpayer who believes otherwise. (While I do believe the government is necessary and therefore some level of taxes is necessary, property tax escalations have been unreasonable and unwarranted. In the city of Houston in 2007, property tax revenue rose by proximally 12.1%. However, the combination of population growth and inflation was only about 5%.)

There's a wealth of free information regarding how to per file your appeal, how to prepare for the hearing and how to present your appeal.

Request for feedback: only about 10% of Texas taxpayers appeal their property taxes annually. However about 75% of Texas property tax appeals are successful. Why don't more Texas taxpayers appeal their property taxes?

 

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