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Navigating the Property Tax Appeal Process

Synopsis

As Texas Apartment Association members start to navigate the appraisal appeal process here are some tips to keep in mind. For more information on how COVID-19 may affect your taxes, reserve your spot for our free webinar, Texas Property Taxes & COVID-19.


Key takeaways

  • The Texas Apartment Association sponsored a webinar for members in February, offering tips on navigating the appraisal review process and avoiding mistakes. An additional webinar on COVID-19 and property taxes will be held this week.
  • The 2019 legislative session made significant changes in the property tax appraisal review process.
  • Property owners have a number of available options in challenging appraisals, including arbitration, special review panels, administrative hearings, litigation and more.

Tips from the Taxman

Earlier this year, Texas State Senator Paul Bettencourt, CEO of Bettencourt Tax Advisors, conducted a webinar for Texas Apartment Association members, “Tips from the Taxman,” which addressed questions such as ways to protect yourself from valuation increases, common mistakes to avoid, and when to consider hiring a property tax consultant or attorney.

Some highlights from this webinar are listed here. For a look at how COVID-19 may impact your property taxes, reserve your spot for TAA’s free “Texas Property Taxes & COVID-19” webinar, scheduled May 6 at 2 p.m. CDT.

Property Taxes are a controllable expense.

Unlike many operating expenses, owners have the ability to challenge valuations, which can help limit property tax costs. You should consider fighting valuations every time. If you don’t challenge the valuation and have a large increase, it can be difficult to unwind those increases over time.

Whether you choose to represent yourself or use a professional, you need to be properly prepared.

Don’t come into a hearing with unanswered questions. You don’t want to bring something like a rent roll or income and expense survey without having a sense of what it means. Also, make sure to separate your emotions from facts. Even if you choose to represent yourself in the informal protest part of the process, you may want to consider getting professional assistance either when going before the appraisal review board or at other points in the process.

Looking to challenge a valuation increase in the year following a successful challenge?

Familiarize yourself with Section 23.01(e) of the Texas Tax Code, which requires an appraisal district to show clear and convincing evidence supporting any such increase.

Consider all options for appealing an ARB decision.

There are pros and cons to whether to pursue arbitration (for properties valued at less than $5 million), specialized review panels (an alternative to ARBs for properties in the five largest counties and valued at more than $50 million), litigation or administrative hearings—including cost, time and familiarity with complex real estate valuations.    

If you do choose to hire a tax consultant, earlier in the process is better than later.

Don’t wait until the day before going to the Appraisal Review Board to try to hire someone. The tax consultant needs to do research and may want to do things such as visit sites, have time to review income and expenses and look at issues such as deferred maintenance.

When hiring a tax consultant, look for someone who has experience with multifamily properties.

Senior tax consultants have to meet advanced licensing requirements. In addition, look for companies that may have a lot of data and can analyze aspects such as property condition, grade and sales over time. Understanding how each appraisal district uses cap rates is also important.

Most importantly hire a tax consultant you can trust.

You can search the Texas Department of Licensing and Regulation database (www.tdlr.texas.gov) for license information, as well as checking resources such as the Better Business Bureau and online reviews.

How will appeals work during the pandemic?

At this point it is unclear how many Central Appraisal District Appraisal Review Boards will operate given the challenges of in-person appeals during the pandemic. It appears many districts will move to using an online or telephonic process. Property owners should contact their appraisal districts for the latest updates on what process will be used.

For more information on the impact of COVID-19 on property taxes, register for the Texas Apartment Association and Texas Taxpayers and Research Association free webinar, “Texas Property Taxes & COVID-19” on Wednesday, May 6 at 2 p.m. CDT.

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