How to Protest Your Property Taxes
Every year presents an opportunity to fight back against The Man, who taxes you on what he thinks your property is worth. However, many who try to protest the property tax themselves experience a lot of frustration, as it can be quite complicated. With a better understanding of the process, hopefully it can be more tolerable and you’ll feel more confident jumping in.
At its simplest, to protest your taxes means to challenge what the appraisal district says your property is worth, based on a number of factors. The more the district says your property is worth, the higher your property tax will be at the end of the year.
Key Dates
First let’s lay out the timeline for you, so you don’t miss any of the deadlines.
April 15
This is about the time that you’ll receive your appraisal notice, the valuation that your appraisal district believes your property is worth. This is what they intend to tax you on. The valuation is not set in stone, so it’s possible to protest and get the valuation changed. If you leave it alone, 99.99% of the time, this is the value that you’ll be taxed on.
May 15
This is the date by which you need to file your protest with the county – usually. Every county has its own appraisal district, and every appraisal district has its own way of doing things. Texas Tax Code simply states that the protest deadline is no later than May 15th or the 30th day after the date of notice (appraisal notice) to the property owner was delivered (Texas Tax Code 41.44). Though it varies a little bit from county to county, every appraisal district is required to accept protests through May 15. You might not actually meet with your appraisal district in a hearing until as late as June or July, but you have to file your intent to protest with the county by May 15. This can be done with a simple letter to your local appraisal review board stating that you wish to appeal your notified value for the current year because you think it is too high or unequally calculated compared to your neighbors' value.
Heads up! This date used to be May 31st, but was changed in 2018 to May 15th, giving you 15 fewer days to file your protest.
Between April 1 – July
Your informal and formal hearings will likely be scheduled within this time frame, and at these hearings is where you’ll actually contest your valuation.
January 1
Confused yet? Good, it’s working. That's exactly what the Tax Man wants! January 1st is the date that your property’s valuation is based on. If you’ve ever used a realtor, you know that your property’s comparative market analysis (CMA) is based on one specific day. That’s because the value of a property can change from one day to the next. January 1st of the current year is the day that appraisal districts use to value your property. That means the question you and everyone at the appraisal district should be asking is, “What was the property worth on January 1st?”
24 months, or the future!
I know that isn’t a date and it sounds more like a novel by H.G. Wells, but I swear it’s relevant. You’re allowed to look back 24 months from January 1st to choose comps to support the value of your property. Now here’s the confusing part. Even though they say you can look back 24 months (Texas Tax Code 23.013), no one will really take that seriously unless you are valuing a commercial property. Why? Because in most residential markets there are more recent sales to choose from, so using a 2 year old sale isn't necessary. The appraisal district may consider your 24 month old sale, but there was a 15% increase in sales prices in your neighborhood between 24 and twelve months ago, don't count on high consideration. The district will most likely go back 12 months and (get ready for this) even look three months into the future in order to find comps — March of that very year.
Here’s a breakdown to make it clearer. The time is June 5, 2022. Your valuation date is January 1, 2022. The furthest you can go back to find comps is January 1. 2021, and the furthest into the future you can go to find comps is March 31, 2022. Clear as mud? Good, grab a paddle and let's keep floating.
Minor Dates
October 15ish, January 31. You should receive your tax bill around October 15th, and January 31st of the following year is when your taxes are due. These dates are not going to matter in regard to your protest, but they are good to know for your understanding of the process.
Another breakdown of the big picture: It’s January 15, 2023. Time to pay the tax bill that you received on October 15, 2022, the tax bill that’s based on the value that you achieved at your hearing on June 5, 2022. You had this hearing because you protested your value on May 15, 2022. You protested on May 15 because you were ticked off at the appraisal notice you received on April 15. Make sense?
Timeline Over, Time for Action
We’ve got another contender for an H.G. Wells novel title. Now that you have a grip on deadlines, it’s time to discuss getting the valuation you want (or as close as you can get to it).
You've sent your protest letter saying you were displeased with your property valuation, now what? The district is required to send you back a confirmation of receipt, usually in the form of a hearing notice. A hearing notice simply states the dates and times of your next opportunity for action.
Let’s get the boring stuff out of the way and define some more terms: informal hearing, formal hearing, arbitration/litigation.
Informal Hearing
This is your first opportunity to actually protest your property valuation, and to make nice with the appraisal district. While it’s not required for the appraisal district to give you an informal hearing, they usually do. Usually it's a specific date and time, but sometimes it's simply a date range to meet with a district representative. After arriving at your scheduled time, you meet with an appraiser at their desk. One of three things will happen: they will agree with your value, you will come to a compromise, or no agreement is reached and you have to go to a formal hearing.
Formal Hearing
Most of the time this will be scheduled a few days or weeks after your informal hearing. The formal hearing takes place in a room with you and (usually) four other people: three ARB (Appraisal Review Board) members, and one appraisal district appraiser. The ARB members are the ones who eventually decide your property’s valuation, and the appraiser is typically there to defend the district’s original valuation. During the hearing, an ARB member will ask you to provide evidence to back up your proposed valuation. Once you’ve finished, the appraiser will then be asked to provide his or her evidence. The ARB member will ask both you and the appraiser for your rebuttal, going back and forth until all parties are satisfied or ARB member cuts it off. It's good to remember that the taxpayer is always allowed the final word during the presentation and rebuttal period, at least according to tax code (Texas Tax Code 41.66b). Finally, the ARB members as a whole will deliberate and decide whose presentation of evidence they preferred and rule on a final valuation for your property.
Arbitration/Litigation
These are the avenues you can take if you’re not happy with the results at your formal hearing and are willing to spend lots of money to achieve the valuation you want. The vast majority of the time, protesting doesn’t result in arbitration/litigation. When it does however, it will likely require hiring either a lawyer or a property tax consultant.
Valuing Your Property
Finally, the moment you’ve been waiting for! It’s mid-June, you’re sitting across from your appraiser in your informal hearing. When he or she asks you what your opinion of value is, “Uhh, I dunno, lower” is not going to cut it. Not unless your appraiser is really cool and helps you look at your property and come up with a reasonable value. Believe it or not, this has happened before. But considering how uncommon it is, it’s better to be prepared to defend your desired valuation.
The way most properties are valued by the appraisal district is pretty complex: you take into account building class, quality, year built, location, land value, and dozens of other factors. You can take this route to determine your valuation too. All you need is a data miner, a software designer, someone to reverse engineer the appraisal district’s valuation equation, and a neurologist to fix your brain damage after you bang your head against your desk. If you want a perfectly calculated valuation, that’s about what it requires.
Because you’re probably not going to go that route, I recommend using the property’s PSF (price per square foot) to calculate valuation. The first step is to find comparable properties that sold in your neighborhood from the range mentioned earlier (from 12 months before January 1st of the current year, to three months after January 1st of the current year). Below is some information to find out about your sales comps to make sure you get an accurate valuation of your property.
Neighborhood
Look for comps within your neighborhood. When I say "neighborhood," what I really mean is "neighborhood code." Every house in the state is assigned a "neighborhood code" by its county, so while you may feel like a particular house is in your neighborhood, make sure the county has assigned it the same code as your house. Look for similar subdivisions that are within about two miles of your property and have similar properties in them. In other words, if you live in a nice house, don’t bring in a bunch of comps from the nearby trailer park.
Year Built
Try to choose comps that are built within seven years of your property. While there’s no set limit to seven years, the older the comp is than your property, the higher the appraisal district will adjust their valuation. So, the closer in time the properties were built, the more predictable the adjustment will be.
Size
It’s best to select comps that are within 15% of the size of your property – between 15% above and 15% below. This can be expanded based on what’s in your neighborhood, but you don’t want there to be too many comps that have significantly different square footage than your property.
Condition
Basically, when picking comps, don’t use a house that’s about to fall over to compare to your newly remodeled home.
Once you have your comps selected, you calculate the average PSF. You may see a decrease in your property’s valuation, but probably only enough to save you one or two hundred bucks in taxes. Let’s see if we can shave a bit more off that valuation.
Re-Condition
That sounds like a tip for silky, voluminous hair, but I'll instead give you tips on how your property’s condition can actually help lower your valuation. Maybe your house isn’t about to fall over, but maybe it is outdated and hasn’t been remodeled in a long time. Maybe you have linoleum floors and your kitchen counters are Formica. Look at the comps in your neighborhood. How do they compare to your house? Are they updated? If they are, this can help bring your property’s valuation down. Bring pictures of your property in to your hearing to support your proposed valuation to. This could save you a lot of money this year.
That’s it! Now you know how to protest your property taxes. Easy as pie, right? It certainly can be, though it is daunting. I think everyone should try to protest on their own at least once – you might find you have a knack for it. Almost 90% of commercial properties valued over a million dollars protest their property taxes. If business owners who are trying to efficiently run their companies can do it, why shouldn’t you? It’s a great opportunity to save some money so you can buy yourself the best new Joola pickleball paddle.
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