The average Texas property tax bill is $3,872—that’s 3.79% of the average household income or, even more severely, 5.3% of the median Texas income. With such high bills, every homeowner needs to be wise about strategies to reduce their property tax obligations and ensure they’re paying a low, fair rate.
The two biggest property tax reduction strategies are filing exemptions on your property and protesting the annual property tax assessment. The right company can potentially save you hundreds of dollars on your property tax bill, and the more years you protest, the more in control of your tax bill you become over time.
While it’s important to protest your property tax bill every year, it’s just as important to have a sound rationale to put on your protest form. Learn more about seven of the most substantial reasons to protest your property taxes that your appraisal district and Appraisal Review Board (ARB) can take into consideration.
Why Should You Protest Your Property Tax Appraisal in Texas?
Before you protest, it’s important to understand what the process does and why it’s so important to ensure your tax bill is fair and accurate. Every spring, your local appraisal district will appraise your home’s value as of January 1 of that year. This number forms the basis of your property tax calculations—if you don’t protest the value, it’s handed off to the local tax office, where exemptions are applied, and your final tax bill is generated from all the different levies that apply to your property.
By protesting that appraisal value—or what is commonly called “protesting your property taxes”—you can lower that initial number and have the savings continue through the lower taxable value and the lower tax bill. But if you miss your chance, then the number is finalized and enters the official records. You won’t be able to lower it from that point in future years, and that can lead to compounding extra costs over time.
Some of the key benefits of protesting your property tax appraisal every year are:
- You can shave hundreds or even thousands of dollars off your appraisal value. With the average effective tax rate in Texas at around 1.6%, every $10,000 reduction saves you $160 right off the top.
- You set the stage for more savings next year. Historical property values are considered when appraisers calculate new appraisals, so every appraisal reduction has carry-over benefits.
- You get peace of mind. Not every property tax protest will lead to savings; the Appraisal Review Board may decide the appraiser’s original number was correct. But you get the benefit of knowing the number was inflated and that your property tax bill is fair.
Homeowners have the right to protest their property taxes every year, and exercising that right brings you nothing but benefits. If you reviewed your property’s appraisal notice this year and you don’t think the number is accurate, protest or hire a property tax protest company to manage the process on your behalf.
Related: 5 Strategies for an Effective Property Tax Protest in Texas
When choosing a property tax protest company to help you with your protest, be cautious of companies that only charge a percentage of your savings with no upfront fee. These companies may stop fighting for you if they realize they can’t achieve significant savings, as it’s not profitable for them.
On the other hand, companies that charge an upfront fee are committed to seeing your protest through to the end, even if it means filing lawsuits to prove the valuation is wrong. The upfront fee guarantees they will fully and completely protest your home, which is the only way to ensure you are not overpaying your taxes.
Here are some of the most common reasons why a property tax protest is completely justified.
#1. Overvaluation of Property Is a Valid Reason To Protest Your Tax Appraisal in Texas
The most common rationale behind protesting your property taxes is that you believe the appraiser overvalued your home. This can happen for any number of reasons: new appraisers, rushed processes, an incomplete analysis, turbulent real estate markets… You may have a feeling the number is too high, either because it’s a big jump from last year or for other reasons. Here are four common causes behind overvaluation:
The Comparable Properties Aren’t in Your Neighborhood
County appraisers rely at least in part on software to calculate your appraisal values each year, and they use the data from nearby homes to inform their opinion. But if they make a mistake or aren’t familiar with the neighborhood, they might compare a home on Mallard Street to a home on Mallard Drive half a county away, or they might not notice that one of the comparable properties is on the other side of a major street.
When you protest, your county must respond by sharing its evidence. You can review it to see if the documents they send prove your initial suspicions right.
All the Homes in the Comps Are Too New or Too Big
Even if the location is right, the homes might be a bad fit. A home that’s 300 square feet bigger than yours, five years newer, or with additional bedrooms should have a higher value; it’s simply not fair to compare your home to that home and decide they have a similar value. But appraisers may do this if you have the smallest home on your block or only big or new homes have sold in your neighborhood recently.
Another similar complication is if your home is in a new development. There simply isn’t enough data to create an airtight valuation of your home, and that means
Your Home Has Unique Easements or Conditions
Depending on your home’s exact location, there may be easements or nearby structures that hamper the property’s value. This could include easements for utilities and fire hydrants, power lines, and cemeteries. Factors like these uniquely affect the value of properties impacted by them, and your appraiser may not factor them in. You can protest to bring your detailed analysis to the table.
The Calculations Were Done Without Actually Looking at Your Home
Under Texas law, local appraisal districts must reappraise each individual property at least once every three years. But that means for one or two years out of every three, it’s an algorithm deciding your property’s new value. This can lead to data drift, incorrect assumptions, and a potential lack of oversight that could drastically increase your valuation. At the end of the day, however, it’s a mistake that can cost you hundreds of dollars.
#2. The Property Designation Is Wrong
Residential property owners can protest their property taxes every year—but this right isn’t just for conventional single-family homes on a small lot. Texans may also have homesteads that are on agricultural properties used for farming, timber, open space, or other commercial applications. If you have an agriculture exemption or your home has historically been appraised as an agricultural property, this grants you a lot of savings on your taxes.
But if you notice that the designation has fallen away and your home has inaccurately been classified as standard residential, now is the time to protest. You or your representative would file the same Form 50-132 Property Owner’s Notice of Protest or comparable form.
It’s crucial to stay on top of your property’s designation and ensure it accurately reflects the current use of the land. Changes in how you utilize the property, such as transitioning from active farming to letting fields lie fallow, could impact your eligibility for agricultural valuation.
If you believe your property still qualifies for the agricultural designation under Texas tax code despite any recent changes in use, make sure to gather evidence supporting your case before filing your protest. Documenting the history and ongoing agricultural use of your land will strengthen your argument if the appraisal district has incorrectly reclassified your property as standard residential.
#3. You Did Not Receive a Notice
Your appraiser may fail to furnish you with certain notices which are required by Texas law. Some of these notices include:
- Notice of Appraised Value: This is a formal communication by the chief appraiser to the property owner, notifying the property owner of the increase in value of the property from the previous financial period. This communication is usually mailed every year.
According to the Texas Tax Code, property owners with residence homesteads should receive this notice by April 1 or as reasonably possible. So, if you failed to receive this kind of notice, you’d have a valid reason to protest your tax appraisal in Texas.
Still, the law requires the property owner to provide evidence that they failed to get the notice—and that this failure was due to circumstances beyond the property owner’s control.
- Notice of a Property Tax Hearing: The law requires the Appraisal Review Board to issue a written notice indicating the expected hearing’s time, venue, and date. According to the Texas Tax Code, this notice should not be later than the 15th day before the hearing.
- Notice of the Result of an Appraisal Review Board: The Appraisal Review Board should send written notice of the results of its hearing. Depending on the outcome of this communication, you can still protest in a court of law or binding arbitration.
#4. The Chief Appraiser Disapproves a Special Appraisal for Your Property.
According to the law, lands used for farming and other agricultural purposes are appraised at values usually lower than the market rates. The intention is to provide some form of incentive to those engaged in productive agricultural activities to spur economic growth. As a result of this reduced valuation, the property owner will pay a lower amount in property taxes than he would have otherwise paid.
However, the tax authority may deny you this tax privilege for one reason or another. When this happens, and you’re convinced that the decision is not correct, you should immediately get professional assistance and appeal.
Related: 2024 Preliminary Values for Texas
While you can still do this on your own, it can consume a lot of your time, and you may miss some crucial information that would strengthen your case. Get professional help from a protest company that is constantly dealing with these issues to streamline the process and maximize your results.
Not All Reasons Can Be Considered by the ARB
There are many reasons that it’s crucial to protest your property taxes. However, there are also some reasons that are invalid, and the ARB cannot weigh these reasons as a factor in their final decision. The two main justifications that homeowners use unsuccessfully are hardship and lack of cosmetic improvements.
Hardship
Property taxes are a significant cost. Homeowners across the state have been struggling to make their payments, especially if they’re on a fixed income or live in a desirable neighborhood that has seen surging house values. Unfortunately, however, financial hardship is not a reason that appraisers or members of the appraisal review board can consider.
Lack of Cosmetic Improvements
Rapidly increasing home values mean that even homes not on the market will increase in value. Sometimes, these increased prices are driven by a combination of location and improvements: upgrades that significantly alter the value of the property. However, many home price increases are driven exclusively by location or location and some cosmetic improvements like fresh paint and new light fixtures.
While it can seem unfair that your property is compared to another one that has undergone some updates and remodeling, ARBs don’t often consider the contrast strong enough to warrant an appraisal value reduction.
Have Property Tax Professionals Argue Your Case
It’s one thing to know that protesting your property taxes is a valuable strategy. It’s another thing entirely to manage the process on your own and successfully lower your property appraisal. Arguing your case effectively requires a thorough understanding of the Texas property tax code, appraisal methodologies, and the specific evidence needed to support your protest rationale.
At Home Tax Shield, we specialize in helping Texans exercise their right to fair property taxation. Our team of experienced professionals is dedicated to representing your interests throughout the protest process, from filing your initial protest to presenting your case at the ARB hearing. Sign up today to ensure you’re well-prepared for the next tax season and take the first step toward a lower, more equitable property tax bill.