Part of going the extra mile with our clients is teaching them how to save money through their properties! Protesting your tax appraised value is a fairly easy, cheap way to do that. Here is the who, what, when, where, and why to get you started:
What is a tax appraised value anyway?
Every year (around April) in Texas, your County Tax Appraisal District will send you an update about the estimated value of your home that they use to calculate your property tax responsibility. This number is NOT the same as the appraisal you may have had when you purchased your house or refinanced it at any point. Your county does it’s own estimate of your homes value from general data they have about your home, market data, and sometimes a quick drive by to see the outside of your home. As you can imagine, these values are not necessarily as accurate as the type your lender uses to approve your loan or refinance. Also, while you typically are hoping the appraisal your lender receives is HIGH, with a TAX appraisal, you want the opposite. Since the county multiplies this number by your property tax rate, the lower their valuation is, the less you have to pay!
How do I protest?
Once you get your notice of your updated tax appraised value (usually via mail), review the value they have given you and if it has jumped up, then it may be time for you to start the process of protesting the value. Protesting is a formal process of letting the city know you disagree with their valuation and requesting they re-review your home to see if this number can be lowered. It may feel strange to argue your house is worth LESS than they say, but in this case, it’s a good thing! It will save you money on your property tax bill.
This process involves some paperwork, but it’s really not too bad. Each county can handle this process a little differently, but most of them allow you to file your protest in writing in person, via mail, or sometimes through an online system. It is the County Appraisal District (referred to as CAD) that will typically review these requests. To find out your county’s process, search for “(your county) appraisal district property tax protest” and it should be fairly easy to find the links to your county’s website with instructions. For the best results, you will need some documentation to show why you believe the valuation is too high. This could include comparable sales in your neighborhood that are lower than your homes appraised value or documentation showing the county has incorrect information about your home on file (i.g. the county has your home as being 2000sqft and you have documentation showing that it is only 1800sqft). Also if your home is in need of repair and you have estimates from contractors for the work needed or photos of the issues, that may help as well. Think of this like a lawyer might–the county appraisers will want hard evidence to demonstrate the value is not what they think it is, not just you saying you think it is too high.
After your initial application is completed, they county will send you a date and time that you have to attend an in-person hearing to discuss your application and hear your case. However, many counties also encourage you to come into their office before your hearing to discuss the value with a county appraiser to see if they will go ahead and adjust your value without having to go through the formal hearing process. You may have more control over the time and day of these informal meetings than you would over the hearing, so this option is often the best way to try to resolve your protest quickly and conveniently. The details of this process can vary per county, but often CAD websites will have lots of detail and FAQ answers to help you navigate the process.
That might be a lot of work, will this really save me money?
It may sound intimidating but we absolutely believe it is worth a shot! The process is typically free, and not only can you possibly save money on the current year’s taxes, this may have an impact on future year’s values. For example, on your primary residence, if you file your homestead exemption (let us know if you think you haven’t!) counties will then limit how much your appraised value can increase from year to year on that home. So if you reduce your tax appraised value this year, they can only raise it, for example, 10% above that the next year. If you didn’t file or win a protest, they would be able to raise it 10% above that higher amount. That means the sooner you win a protest, the more value you will get over time, kind of like compounding interest! You won’t always win if you protest every year, but we think it’s worth a shot!
Ok, I’m convinced, when do I have to do this?
Most counties in DFW will give you from the time you receive your notice until May 31st to file your initial protest paperwork or up to 30 days from when your notice was mailed to you, whichever is later. We recommend starting as soon as you get the letter though to avoid the last minute rush! Also, if you decide to use a company to help you protest, sometimes they only take on so many clients a year and/or only up to a certain date to give them time to prepare your file.
Once you get that letter, go to your county CAD website and get started OR reach out to your Mile27 Coach to discuss the current comparable sales in your area to see if it may be worth protesting. Our Mile27 team can also refer you to some companies that can help you with this process for a small fee or a percentage of your savings if they are successful (we like the 2nd option better, if possible).
If you would like our help, call your Mile27 Coach or use the Contact Us page for tax protest company referrals. Remember, any clients of Mile27 have us as Real Estate Coaches for life!
DISCLAIMER: This information is specific to DFW in 2018 and tax appraisal processes may vary and may change at any time without notice! Consult your local county taxing entity for the most current local rules, deadlines, and processes. The information above was primarily based on information from the Dallas and Collin County CAD websites.