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Paying taxes is an arduous chore. Even with an escrow account, you can never be quite sure what your property tax bill will look like from year to year, adding an element of uncertainty to your financial planning. Even worse, your property taxes can suddenly surge in size, leaving you with what feels like an arbitrary, unfair tax bill.
However, you aren’t left holding a bill with no option but to pay it. Your county appraisal district allows homeowners to protest their property taxes by contesting the assessment of your property’s value. With the correct arguments and evidence, protesting property taxes can decrease that assessment so it’s a more fair evaluation of your property’s actual value and, ultimately, reduce your tax bill.
It’s a complicated process that can seem a little opaque if you haven’t gone through it before. In this article, we’ll cover:
- The basics of protesting property taxes
- What you stand to gain from protesting property taxes (both this year and in perpetuity
- Additional strategies for lowering your property tax bill
We’re here to help shine a light on the property tax protest process and ensure you clearly understand your options, so you don’t have to accept an assessment you think is unfair. We can also help take on the process of protesting property taxes on your behalf.
What Does It Mean to Protest Your Property Taxes?
Protesting property taxes doesn’t involve calling your city hall to complain or arguing about getting a second opinion on your property tax bill. Instead, it’s a specific administrative process that your county appraisal district oversees that allows people who own in-county residences to formally submit a protest and a counter-assessment of their property’s value. Keep reading to learn more about the mechanisms and processes.
Related: Understanding Your Texas Property Tax Bill
How Your Property Taxes Are Decided
Every state and county implement different processes, and even other properties — such as single-family homes, multi-family properties, commercial buildings, and more — go through various methods and calculations. For most homeowners, your property will be assessed by an assessor hired by the county appraisal district to evaluate the land and the structures on that land. Assessors look at different factors such as the market value of your property, the value of comparable properties that have sold recently, growth in your area, and historical increases in value. There are multiple different methods the assessor can use to arrive at a general assessment of your home’s worth.
Once there is an assessed value for your property, the county will tax your property at a set tax rate (or collection of tax rates). You may have to pay different tax rates for other jurisdictions (or categories), such as the town or county school district, community colleges in the county, local government, and more. All those tax rates are added together to create a set total tax rate for your area.
Your property taxes are calculated through this basic formula:
- Property tax = Assessed property value * total tax rate
You’ll receive a notification in the mail, typically in April, that lists your assessed value, your property taxes due to the county, and instructions for paying your bill (if applicable) and protesting your property taxes.
How to Protest Your Property Taxes
Most counties offer two or three ‘stages’ for protesting property taxes. They follow this general order:
- Preliminary protest: Either online or through the mail, you can submit an official form that states you’re protesting property taxes, what you think your property’s assessed value should be, and why you believe your assessment is more accurate than the assessor’s. As a result of this form, you may receive a call from your county to discuss the issue further, or they may have a nominal decrease to your assessed value as a counter-offer.
- Informal hearing: If you don’t accept the counter-offer or outcome of the phone call, you will schedule an informal hearing where you meet with a staff appraiser. These meetings last approximately 20 minutes, and you can present evidence that the original assessment of your property is wrong. The appraiser will then determine whether they can lower the assessed value or if the initial opinion stands.
- Appraisal review board hearing: To continue protesting your property assessment value, you can schedule a formal hearing, where you will present your case in front of a panel of county residents. The district appraiser will also present their evidence and arguments. At the end of the hearing, the board or panel will announce their decision.
The Results of Protesting Property Taxes Each Year
When you protest your property assessment, you can expect at least some degree of compromise. Many counties will lower your assessed value to at least some degree, especially if you maneuver through all three process stages. Your resulting property tax bill is lower when your assessed property value is lower. This primary outcome can give you a bit of relief in the current tax period by either reducing the money owed or leaving more money in your escrow account. But lowering your property tax bill has long-term savings implications that make successfully protesting your property taxes even more valuable.
Related: A Quick Guide to Homeowner Taxes in Texas
4 Approaches to Assessing Your Property Tax
While following the instructions on your property tax bill to protest your property taxes during the allowed window of time has clear benefits, it’s not the only way to lower your property taxes. Some other approaches you can take include:
Hire a Service to Protest on Your Behalf
If undergoing the property tax protest process seems tedious, or you don’t have time to manage it, you don’t have to throw in the towel and accept the county’s first assessment. Instead, you can hire a service that is familiar with the process and can manage the whole project for you, from the first filing to the appraisal review board hearing. Some services charge a flat fee, while others will charge only a percentage of the money they save you.
Complete the First Stage of Protesting Your Property Taxes
The multi-stage process is overwhelming, especially if you’re busy. Depending on your county, you may see a sufficient reduction by filing that initial protest form. That simple step may only take half an hour (or just a couple of hours if you gather repair estimates and other evidence to strengthen your case), and you can see a steep ROI if your county agrees to compromise and lower your assessed value immediately.
File Your Homestead Exemption for Your Primary Residence
Complete this step in addition to protesting your property taxes. If the property in question is your primary residence, most states allow you to file a homestead exemption that exempts a portion of the property’s value from the tax rate in the area. For example, a $200,000 property with a $40,000 homestead exemption only pays taxes on $160,000 of the property value. Starting this year, the $25,0000 homestead exemption credit rose to $40,000.
Most states also offer either automatic senior and disabled exemptions or allow residents to apply for exemptions that apply to them.
Pro Tip:
Some states, like Texas, do not allow properties with an adequately filed homestead exemption to have an appraised value greater than 10% of the previous year’s worth.
5 Reasons to Protest Your Property Taxes Every Year
Ultimately, protesting your property taxes allows you to present an argument regarding what you believe to be a fair value for your property so you can lower your assessed property value and your property taxes. Consider these five more specific benefits of protesting your taxes.
1. Pay Less in the Current Year
Protesting your property taxes successfully has an immediate financial benefit. You will owe fewer property taxes, which means keeping more money in your pocket.
2. Pay Less Next Year by Reducing the Base Value
Most counties assess properties by applying a percentage increase to all like properties in your neighborhood or region. By reducing your assessed property value one year, that percentage increase is applied to that smaller number in the following year. For example, suppose you had a house initially assessed at $225,000, but you successfully protested it and reduced it to $200,000. Suppose your county raises your property assessment by 13% the following year. Instead of seeing an assessed value of $254,250, it’s $226,000. If you protest again in that second year, you’ll see an even more significant difference in the third year between your assessed value and what your property assessment would be if you never protested at all.
3. Enjoy Long-Term Savings by Protesting Your Taxes and Filing for a Homestead Exemption
Combining protests and a homestead exemption reaps you the biggest reward of all. You’ve protested your property taxes, knocking down your assessed property value from $225,000 to $200,000. But you’re in a state like Texas that caps the total percentage of increased assessment at 10%. Now, rather than facing an assessed property value of $254,250 in Year 2, you see $220,000 on your document. No matter what your county’s total tax rate is, that’s a sizeable difference you’ll see in savings. Year after year, the savings will grow between what you pay and what you might have paid.
4. Help Your Neighbors
When your neighbors undergo the same property tax protest process you are, they may use your home as an example of a comparable property — just like you might use their property. Because you’ve diligently lowered your property assessment, they can use your numbers as evidence that their property assessment should also be lower. When everyone works in tandem, everyone benefits.
5. It Doesn’t Hurt Your Selling Price
When putting your property on the market, don’t worry about your county property assessment. This number has little to no impact on the listing price you can post. Real estate agents and buyers don’t look at county tax records to determine how much your property is worth. Instead, they’ll evaluate the selling price of recently sold homes in your neighborhood and the unique features of your property.
Protect Your Finances: Protest Your Property Taxes With Help From Home Tax Shield
At Home Tax Shield, we’re here to help you keep your property assessment fair, so you pay only your fair share of taxes. Contact us today to learn more about our services and to learn more about how you can benefit from protesting your property taxes. If you want to help in protesting your property taxes, sign up here to have our experts handle the process.