how to appeal your property taxes for Apartment Owners in texas?

How to appeal your property taxes for Apartment Owners in texas?

Property taxes are one of the most expensive line items for apartment owners. However, many owners fail to properly appeal.

Even though owners understand that property taxes may be controlled and decreased through an appeal, others consider taxes as an arbitrary estimate supplied by the government that cannot be properly disputed.

It usually comes down to the old saying, "You can't battle city hall."

Fortunately, the Texas property tax appeals procedure gives owners many opportunities to appeal.

This procedure, which should be handled either directly by the owner or by a property tax specialist, should comprise a concerted attempt to appeal and reduce property taxes on an annual basis.

Reducing the most expensive line item has a considerable impact on the owner's overall operational expenditures.

While it is not feasible to completely avoid the burden of paying property taxes, it is possible to significantly lower taxes, frequently by 25% to 50%.

Why some owners don't appeal?

Some property owners do not appeal because they either do not grasp the procedure or do not comprehend that there is a significant chance of obtaining considerable property tax reductions. 

Some property owners feel that because the market value of their property exceeds the assessed value, they cannot appeal and decrease their property taxes. 

Although appeals based on uneven appraisal are relatively new, there is a clear mechanism to challenge property taxes based on unequal valuation at the administrative hearing level.

When a property is evaluated inconsistently with nearby or comparable properties, this is referred to as unequal assessment.

Furthermore, some owners are hesitant to employ a property tax consultant, even though many experts will operate on a contingency fee basis, which means that the owner will incur no costs until property taxes for the current year are decreased.

An appeal of the appeals procedure

The following are the main phases in the yearly property tax appeals process:

• Request notice of assessed valuation; file an appeal, and prepare for a hearing.
• Examine your records.
• Examine the market value appeal.
• Review uneven assessment appeal Set negotiation parameters Administrative hearings Determine if binding arbitration or court appeals are necessary
• Pay your taxes on time.

Inquiring about notification of assessed value

Property owners can seek notification of assessed valuation for their property once a year.

The Texas Property Tax Code Section 25.19g gives the owner the option of requesting a written notification of the assessed value from the chief appraiser.

Owners benefit from obtaining and receiving written notice of assessed value for each property because it allows them to evaluate the assessed value.

This message should be issued once a year. If the assessed value increases by less than $1,000, the appraisal district is not required to submit a notification of assessed value.

However, if an owner was dissatisfied with a previous year's valuation and the value remained unchanged, the appraisal district is unlikely to provide a notification of the assessed value for the current year.

In this case, the owner may neglect to object since he or she did not get a notice of assessed value for the property.

How to File a Petition and Appeal?

Each year, on or before May 31st, the property owner should file an appeal for each property.

However, while many owners are content with the assessed value, there are numerous circumstances when an appeal is warranted.

There are two ways to appeal:

• unequal appraisal

• market value based on data provided by the appraisal district to the owner before the hearing.

You can file an appeal by filling out the appraisal district's protest form and identifying both excessive value (market value) and uneven appraisal as the reason for your appeal.

Furthermore, the property owner can simply send a note identifying the property and expressing displeasure with some assessment agency judgment.

The notification does not have to be on an official form, though the comptroller does issue one for property owners' convenience.

House Bill 201 - Important Information

House Bill 201 is the industry lingo for a property owner's right to seek and get a copy of the information the appraisal district will utilize at the hearing 14 days before the hearing.

The term House Bill 201 comes from the bill that was used to implement the statute. The specifics of House Bill 201 may be found in Texas Property Tax Code sections 41.461 and 41.67d. 

When submitting a protest, the property owner should also request in writing that the appraisal district give a copy of any information that the appraisal district intends to present during the hearing. 

The appraisal district will usually ask the property owner to come to the appraisal district office to pick up the information and will charge a small fee, usually $0.10 per page.

While House Bill 201 requests are very inexpensive (usually $0.50 to $2.00 per property for residential and commercial), the information is important in preparing for the hearing.

Furthermore, submitting a House Bill 201 request is critical because it limits the material the appraisal district can present at the hearing to what was submitted to the property owner two weeks before the hearing.

Getting Ready for the Hearing

Begin by double-checking the appraisal district's information for your property. A discount will be allowed if the appraisal district overstates the quality or amount of renovations. 

The next step is to go over the market value and uneven evaluation information supplied by the appraisal district in the House Bill 201 package. 

Examine the appraisal district's income analysis vs your actual revenue and spending records if the subject property is an income property.

Consider the following areas for rebuttal to the assessment district's analysis:

1. Vacancy rate Gross potential revenue Total effective gross income, including other income Operating expenditures Amount of replacement reserves Net operating income Capitalization rate Final market value.

2. Many property owners and consultants begin with real revenue and cost data and then apply one or two of the assessment district's assumptions.

They do, however, largely use information from real revenue and costs in creating their own income analysis and market value estimate for the subject property.

3. When similar sales are the key difficulty in evaluating market value, begin by comparing the appraisal district's comparable sales data to the assessed value for your property.

Convert the appraisal district's sales prices to a per square foot or per unit basis. Then, compare the sales to your property's per square foot or per unit assessment. During the hearing, sales might be beneficial.

4. Except for brand new or relatively new homes, the cost technique is rarely employed in property tax hearings.

If your property is new, the appraisal district will most likely want to evaluate the cost information, which you will most likely not want to disclose.

5. In many circumstances, the real cost of a property exceeds the appraisal district's estimate.

If this is the case, you should probably file an appeal based on uneven appraisal rather than market value.

No matter how compelling your case or how passionately you present it, appraisal district staff and Appraisal Review Board (ARB) members tend to assume that for new properties, cost equals worth.

Functional Obsolescence and Deferred Maintenance

Information on deferred maintenance and functional obsolescence is also crucial for the market value appeal and, to a lesser extent, the uneven appraisal appeal.

Deferred maintenance might comprise the following items:

• Rotten wood.

• Rotten paint.

Unless the property owner furnishes repair costs from outside contractors, most assessment districts give requests for changes based on deferred maintenance little weight.

There are occasional exceptions, such as where a cooperative informal appraiser or a friendly ARB would accept an owner's estimate of delayed maintenance and make changes based on those expenses.

 When third-party cost estimates are presented, most appraisers and ARB members are far more likely to make revisions. 

Furthermore, appraisers and many ARB members are hesitant to deduct the entire cost, arguing that "we've been given a replacement reserve allowance for this item for the previous years, and it'd be double-dipping to deduct the entire value off it in the current year.

" While this is a false appraisal argument, it is common practice in many appraisal districts. In reality, the expense of correcting postponed maintenance is taken from a potential buyer's offer.

A three-bedroom apartment unit with just one bathroom, or a two-bedroom apartment with no washer/dryer hookups in an area where those connections are ubiquitous, are examples of functional obsolescence. 

Another example is an apartment with a window air conditioner in a neighborhood where central HVAC is common and expected.

Analysis of unequal appraisal

Section 41.43(b)(3) of the Texas Property Tax Code allows for appraisal or appeal on uneven appraisal, including ratio studies and "a fair number of similar properties correctly adjusted." 

Almost all uneven appraisal arguments have a decent number of comparables that have been adequately adjusted. Comparables share comparable qualities.

This is largely due to the complexity and expense of conducting a ratio analysis. Historically, many appraisal districts held that the property owner was required to get a fee appraisal for each similar property and compare the appraiser's estimated market value to the assessed value.

The expense of obtaining several assessments rendered this method financially unfeasible. It is simple and uncomplicated to compile a decent number of comparables that have been correctly modified.

The first step is to select a sufficient number of comparables. A common number of four to five comparables is utilized at a property tax hearing, although in exceptional circumstances, property owners pick ten to thirty.

In certain circumstances, just one to four comparable houses are worth considering. The majority of uneven appraisal presentations contain three to 10 comparables.

The number of appropriate comparables is determined by the property's location, kind, size, and age.

In the northern section of Harris County, for example, there would be fewer five-year-old bowling lanes than freshly completed apartment complexes.

After selecting a sufficient number of comparables, arrange them in a tabular fashion, containing data columns such as account number, net rentable area, year constructed, street address, assessed value, and assessed value per square foot.

You should also read the material on uneven appraisals in the appraisal district's House Bill 201 package. In many circumstances, the appraisal district's uneven appraisal study will show that your assessed value has decreased!

If the appraisal districts' uneven appraisal analysis shows a decrease, either the informal appraiser or the ARB should make the assessed value adjustment for you.

One of the reasons to appeal every property every year is the possibility to have an assessed value automatically decreased based on the appraisal district's uneven valuation methodology.

Finished Hearing Preparation

Determine the pros and limitations of each strategy and select which grounds of appeal give the best possibility for a substantial decrease after evaluating the appraisal district's information on your property, the House Bill 201 package, and your market value and unequal valuation studies. 

Although unequal appraisal appeals have clearly been the law of the land since 2003, certain appraisal districts and review boards have decided to ignore the Texas Legislature's choice for unequal evaluation.

Although there is litigation pending that should address this problem within the next year, it is advisable to consult with someone versed in local property tax appeals to learn whether the county appraisal district and ARB in your region are reviewing uneven valuation challenges.

Set Negotiating Boundaries

After evaluating the facts, it is critical to choose the maximum level of assessed value you will accept at the informal hearing since once you accept an assessed value, the appeal process for the year is over and you will not be able to appeal further.

Procedure for Administrative Hearings

The informal hearing and the appraisal review board hearing are the two phases in the administrative hearing procedure.

Informal Hearings

The informal hearing follows the following procedure and rules:

Meet with a representative of the appraisal district. At this meeting, you should be courteous and well-prepared.

While many property owners are unhappy and furious about the high amount of real estate taxes, the assessment district appraiser has no control over the tax rates established by various bodies, nor the property tax policy in the area or the state. 

The appraiser for the assessment district is attempting to do his job professionally and likes it when property owners collaborate with him on that basis.

Provide the appraiser with information about your property, and he will evaluate it together with any information he possesses.

The appraiser will most likely make a rapid offer to settle the assessed worth of your property. You have the option of accepting the value or negotiating further.

In either case, you should know whether the appraiser will provide an appropriate value within 10 to twenty minutes.

If the value is satisfactory, the dialogue should be concluded by agreeing on a value for the current year. If the value supplied is not satisfactory, request an ARB hearing.

There is an unfortunate bias in the system since the ARB members are selected and paid by the appraisal district, but most ARB members are reasonable people who want to make appropriate decisions.

Like the appraisal district appraiser, the ARB does not set tax rates or tax policy. The members are also not responsible for the effectiveness of local government.

It is unlikely to help your case if you complain to the ARB members about either the high level of property taxes or the poor quality of some aspect of local government.

Hearing Before the Appraisal Review Board (ARB)

The ARB hearing panel is made up of three neutral persons who are chosen and paid for by the appraisal district. The majority of ARB members are between the ages of fifty and eighty.

The ARB will want you to submit your findings in three to 10 minutes. They will usually sit patiently while you deliver your presentation and may have questions afterward.

The appraisal district will be represented at the ARB hearing by an appraiser from the appraisal district, who may or may not be the same individual who attended the informal hearing.

The appraiser will remark on the evidence you supplied and will frequently share further information available to the appraisal district.

If you requested a House Bill 201 package for your property, the appraisal district appraiser's ability to present evidence during the hearing is severely limited.

Following the appraiser's presentation, ARB members may ask questions.

The property owner will then be given one last chance to refute facts offered by the appraisal district appraiser and rapidly explain the evidence.

The members of the ARB would prefer that you do not repeat your complete presentation at this time.

The ARB members will discuss and make a decision after hearing the material. This conclusion is not negotiable, and they will not change it if further evidence is offered.

The hearing is practically concluded when this judgment is revealed.

Two to four weeks later, the ARB will write a letter outlining their judgment and informing the owner that they have 45 days from the date of receipt of the ARB decision to request binding arbitration or submit a court appeal.

Judicial Review or Binding Arbitration

Property owners with an assessed value of $1 million or less may make a request for binding arbitration beginning in September 2005.

The owner must file with the appraisal district within 45 days of receiving notification of the ARB's decision. 

The binding arbitration option is appealing since it includes a loser-pays clause.

If the final value is closer to the owner's opinion of value, the appraisal district pays for the arbitrator's cost, and if the final decision is closer to the appraisal district's opinion of value, the owner pays for the binding arbitration.

Binding arbitration was enacted as an alternative to judicial appeals, which may be costly to pursue.

Many property owners file legal appeals to cut their property taxes even further.

In 2005, O'Connor & Associates filed over 1,200 judicial appeals on behalf of Texas property owners.

If the property owner and attorney do not understand the procedure and do not have a plan in place to limit the expense of legal and expert witness fees, judicial appeals can be costly.

Generally, judicial appeals are successful. However, success involves assistance from the property owner, such as responding to inquiries, producing documents, and, if necessary, taking a deposition.

Because it lowers the base value, a court appeal is a viable alternative for lowering property taxes.

This is significant because the appraisal district and ARB utilize the base value from the previous year for determining the administrative hearing value.

Conclusion

Property owners may save a lot of money on their property taxes if they appeal regularly. When preparing for the appeal hearing, consider appealing on both market value and uneven evaluation, and gather House Bill 201 material. 

Property owners should take into account all three stages of appeal informal hearing, ARB hearing, and judicial appeal/binding arbitration.

While the ARB hearing and judicial appeal/binding arbitration might seem scary, if you grasp the basics, each is simple.