Step-by-Step Guide to Filing a Property Tax Protest
You will pay this year's taxes on your Texas property at the end of this year. That's it... you're done. It is too late to protest your tax amount or assessment in December. Your County tax office will allow you to pay your tax through January 31st of next year, but they will then apply penalties with interest on delinquent taxes and begin the procedures that may lead to losing your property via a tax sale. Property taxes are a serious business, even if your mortgage company pays the taxes from your escrow account. It is still your money.
Texas is unique in allowing property owners to challenge their property assessment. This is the property value used to calculate your taxes. In all Texas Counties, the responsibility to properly value your property rests with the County Appraisal District, sometimes abbreviated to just CAD. In the Houston area, for instance, the Harris CAD values more than 800,000 properties annually. Each one, every year... at least theoretically. That provides a lot of opportunities to get something wrong, and they often do. Most factual errors are easily corrected by the CAD when brought to their attention, and they are happy to make things right. These errors might include the size of your home, the exemptions that should be applied, improvements that have been made or removed, or other factual errors that are easily defined.
That is not always true when it comes to market value. The CAD uses mass appraisal techniques to value dozens (or hundreds) of properties within a given market area. These techniques usually provide equity with other taxpayers in your area, but it is impossible to properly assess market value for each property, since every property is different, if only in location. You know your property better than anyone... the good aspects, the bad, and the ugly. These individual factors can easily translate into a successful protest if you file your protest timely and follow the rules.
Your tax assessment is determined each year on January 1st. This is true, even if you don't receive the assessment until April or May... the value is determined on January 1st, even if a freeze in February burst water pipes or a hurricane in September affects the value of your property you must still protest the value on January 1st, the "effective date" of valuation. Market factors that occur before January 1st can be considered in a protest, but not the factors that change afterwards. The market is not static, and changes continuously.
You must file your protest by May 15th, or within 30 days of receiving your assessment, whichever is later. With an appropriate basis or rationale for disagreement and appropriate data to support your case, you may wish to present the protest yourself. A successful protest may result from any of three opportunities for a hearing. The first often called an "informal" hearing and is usually with the CAD appraiser. This hearing usually allows you to present evidence and data to support your position, and the appraiser will weigh your data against the strength of his own evaluation. The appraiser may realize that a reduction is justified, and if the resulting value is agreeable to you, it's a done deal and the appraiser will adjust the assessment. If an agreement is not satisfactory, you have the right to appeal to the ARB. The CAD appraiser will help with scheduling a hearing.
The Appraisal Review Board or ARB consists of members of your community, often men or women from local businesses and community leaders from organizations not related to taxing authorities. These ARB members are from your community, and are faced with and familiar with similar taxes on their own properties. They are to be unbiased and fair in dealing with protests, but they hear from the CAD appraisers regularly on many protests, and your protest is usually just one of many.The ARB must base its decisions on evidence. It hears evidence from both you and the chief appraiser... unbiased? Maybe.
Before 2005, the ARB hearing was usually the final appeal. The only other choice was to file suit in District Court, an expensive option involving lawyers, depositions, followed by a bench or jury trial. Even if successful in the appeal, the costs often greatly exceeded the savings. Thanks again to the Texas legislature, taxpayers now have another option... binding arbitration.
Arbitrators are selected and trained by the Texas Comptroller to handle tax appeals beyond the ARB and CAD determinations. The decisions made by arbitrators are generally considered binding on all parties and final for the tax year under appeal. Arbitrators are generally assigned by the Comptroller, but property owners can select arbitrators from within or outside their County and can specify the type of hearing requested, in-person or by teleconference.
