Property taxes are a substantial expense for Texas homeowners, averaging $3,600 a year. To reduce this expense, homeowners should annually review and consider appealing property taxes. While there is no guarantee that an appeal will be successful, a recent survey by O’Connor & Associates indicates that 70% of property tax appeals are successful.
Since the mortgage company generally spreads out the payments, property taxes tend to be a hidden tax. Although the homeowner writes a check, including taxes and insurance on a monthly basis, the property tax component is not apparent. The property tax component can become quite obvious when the homeowner is asked to finance an escrow shortfall.
Although 70% of property tax appeals are successful, only 7% of homeowners appeal each year. Research indicates five main reasons why homeowners do not appeal:
1. The process seems overwhelming and they don’t know how to appeal,
2. They do not believe that an appeal is likely to succeed,
3. They think the appraised value of your home is below market value and there is no basis to appeal,
4. They do not understand that they can appeal for unequal appraisal,
5. They are busy and don’t want to set aside time, given the assumption that “you can’t fight the council.”
Why appeal?
Consider an appeal for a $150,000 home where property taxes are reduced by 5%. This would reduce the assessed value by $7,500 and property taxes by $225, based on a 3% tax rate. Since the typical appeal hearing takes less than an hour, these are significant savings for the time involved. Regularly appealing your property taxes will minimize the value, so you will be assessed for less than most of your neighbors. Most property tax appeals are resolved at the informal hearing, which is the first step in the process.
how to appeal
The first step in appealing annually is to send a written notice to the appraisal review board (ARB) for the county in which your home is located. Even if you have not received an appraisal notice from the appraisal district, file a notice of appeal by May 31 for the following reasons:
1. Notice of Appraised Value can be lost in the mail,
2. No notice of assessed value is required unless your assessed value increases by $1,000, and
3. You must appeal annually
You can file a notice of appeal using the Comptroller’s form available at http://www.cutmytaxes.com or by sending a letter to the ARB. The letter to the ARB simply needs to identify the property being appealed and the basis for your appeal. You should always appeal to both market value and unequal appraisal. With appraisal district staff extremely busy in late May and early June, submitting any data about your property tax value is probably a waste of time. At the same time you submit your notice of appeal to the ARB, submit a request for “Bill 201” to the appraisal district chief appraiser. The House Bill 201 application will provide you with a wealth of information at a modest price.
Reasons to obtain information on House Bill 201
Since most homeowners are not familiar with House Bill 201, you may be wondering what it is and when it will be available. House Bill 201 is the term used by property tax assessors to describe provision 41.461 of the Texas Property Tax Code. This section says the following:
“at least 14 days before the hearing on a protest, the chief appraiser shall: …inform the property owner that the owner or the owner’s agent may inspect and obtain a copy of the data, schedules, formulas, and all other information that the chief appraiser plans to present at the hearing to establish any matter at issue.”
The property tax code further gives the chief appraiser the right to charge up to $15 for each residence and up to $25 for each commercial property owner for this information. However, there are limits on the cost per page that an appraisal district can charge. In practical terms, the maximum charge is $1 to $2 per residence. In Harris County, most homeowners can print this information from the appraisal district website once an appeal has been filed using the “I file” system.
This section of the tax code was added in 1991, but many appraisal districts have tried to ignore this section of the property tax code for years and some still do. After discussing this section of the Texas Property Tax Code on a radio show in 2005, several listeners called back a week or two later to report that certain appraisal districts claimed they were unaware of this section. When O’Connor & Associates sent House Bill 201 requests to appraisal districts in 2005, some called us and said “what do you mean you want our information? We plan to use your information at the hearing to prove our worth.” While these examples seem quaint and cute, it’s amazing that 15 years after taxpayer-friendly legislation was passed, appraisal districts still ignore property owners and tax assessors who request this information.
There are at least seven reasons to use House Bill 201 to obtain the information the appraisal district will use at the hearing:
1. It is an effective way to obtain market value and unequal appraisal information for your property tax appeal.
2. You will receive information from the appraisal district on the size, condition, and other qualitative and quantitative data of your home,
3. Information can be obtained for a nominal cost,
4. It is useful to know what information your adversary will be able to use at the hearing,
5. Making the request limits the information the appraisal district can present at the hearing. If you do not ask for your information before the hearing, they can use any information available at the hearing. However, if you request the appraisal district information using a House Bill 201 application, they can only use the information previously provided to you,
6. If you are not provided with market value or unequal appraisal information in the House Bill 201 application, you win by default at the ARB hearing, and
7. In many cases, the information in House Bill 201 from the appraisal district clearly supports a lower value.
Preparing for the hearing
When you receive House Bill 201 information from the appraisal district, start by reviewing your appraisal district’s description of your home and ask yourself these questions:
1. Is the year of construction exact?
2. Are the qualities and amenities accurate?
If the appraisal district exaggerates the quantity or quality of improvements to your property, this is an excellent way to reduce your property taxes for both the current and subsequent years.
Filing a 2525c Appeal
If the appraisal district has overestimated the size of your home by more than 5% to 10%, even if you did not file a property tax appeal in prior years, you should consider filing a 2525c appeal. This will allow you to reduce the assessed value of your property for the current year and for previous years.