As a Texas property owner and taxpayer, protesting your property tax valuation is a smart business practice and a fundamental tenet of Property Management 101.
Commercial real estate across Texas has experienced skyrocketing appraisal increases over the last several years without proportionate reductions in tax rates. In 2015 alone, commercial property valuations in Houston increased 12 percent—some areas of Houston experienced a staggering 100 percent increase in commercial property values in just three years.
Texas property taxes are the sixth highest in the nation. Moreover, since property taxes are one of the primary revenue sources for Texas counties, county appraisal districts have a prerogative to see higher property values.
Property taxes make up a substantial percentage of the costs that eat into your net operating income. So no matter what, the answer is yes.
Furthermore, it is worth protesting every year. Without strong convincing evidence, appraisal districts will typically not settle a protest for less than the previous year’s value. Therefore, you want to achieve the lowest value possible this year to help you on next year’s appraisal.
It is also worth noting that the game can be less stacked against the commercial property owner than the residential property owner when protesting a tax appraisal. As a commercial property owner, you may actually have more market knowledge than the appraisal district. With residential real estate, appraisal districts have access to all sales data. However, with commercial property, they operate in the dark much like any other purveyor of commercial real estate. The sales data the appraisal district possesses will be limited, and thus conveniently skewed to their favor. Nonetheless, for this reason, commercial property owners and managers have more opportunity to present data that contradicts the appraisal district’s data.
Steps for Protesting Property Tax Appraisals
Filing your protest before the May 31 statewide deadline, is first and most important step in the protest process. If you fail to file a protest on time, your options are limited.
Each county appraisal district is different in the ways in which they can receive your protest. However, each appraisal district has forms on their website for protesting, but technically, an official form is not necessary. Any written notice of protest will be acceptable as long as it identifies the owner, the property that is the subject of the protest, and indicates apparent dissatisfaction with an action or decision taken by the appraisal district.
Some of the metro-area appraisal districts have implemented protest e-filing capabilities, allowing you to easily protest straight from your computer.
E-Filing Links for Texas Metro-Area Counties:
Once the written protest is received, an informal hearing is scheduled by the chief appraiser, appraisal district or appraisal review board (ARB). The ARB will give you at least 15 days notice of the date, time and location of your hearing.
The purpose of the informal hearing is to hear the details of how your commercial property value was assessed, and to allow you the opportunity to provide details of your protest to, typically, an internal employee of the appraisal district.
If you and the appraisal district representative are unable to reach a settlement during the informal hearing, a formal hearing will be set for you to appear before the Appraisal Review Board, which is an impartial panel of your fellow citizens that is independent of the appraisal district. The ARB members are required to maintain a truly unbiased approach to each property under protest. Communication between ARB members and the chief appraiser or appraisal district employees is strictly controlled. In fact, ARB members are prohibited from discussing a property owner protest with anyone outside the hearing.
In the formal hearing, you will want to present your evidence supporting the value you believe your property is worth just like in the informal hearing.
If you are not satisfied with the ARB’s decision, you have the right to appeal the ARB value determination order. In order to do so, you will need to retain an attorney to file the appeal in Texas district court. Such appeals are de novo, meaning that in the appeal, you are not limited to using only evidence presented at the protest.
If you choose to appeal, your attorney must start the process by filing a petition within 60 days of the date of the ARB’s order.