Beverly Thomas has lived at the Riata Ranch for 16 years and said while she never really knows what to expect from her property valuation year after year, she knows it will always increase. The rating of their Cypress home has increased nearly 28% since 2017.
“The problem is, the rating district has an open area every year to increase your rating and raise it to the maximum legal limit every year – regardless of what the market says,” she said. “One problem for me is that I’m retired and living on social security. My house has been paid for, but every year they add to the value of my house so much that … it’s almost like you could be taxed on the house you paid for. “
Thomas was one of more than 415,000 Harris County accounts whose valuations were appealed last year – a record number and part of an upward trend of residents pushing back their property tax bills.
Chief appraiser Roland Altinger said that with the increasing demand for residential real estate, their values have risen by 8% to 10% and the values of commercial real estate by 9% since last year.
Although protests are growing in popularity, the results have been mixed; the process frustrates some homeowners; and some neighborhoods appear to be more successful than others.
For example, 36% of Jersey Village homeowners in 2019 protested their estimates for an average of 4.2% savings. In the Willowbrook area, 12% of homeowners protested, and they saved about 1.67% of their values that same year, according to January Advisors.
Protests offer homeowners a tool to reduce their tax burden. In the meantime, some state legislators are pushing for additional reforms of the property tax system, which was revised in 2019 with the Senate Act 2.
“[Based on] According to the public policies we passed in the 2019 legislature, tax rates will actually go down as values go up – and school taxes in particular, “said Senator Paul Bettencourt, R-Houston.
Each spring, the Harris County Appraisal District – an independent entity separate from the county government – begins sending property owners their market and valuation values for the tax year. The appraisal reflects any exemptions a property owner could possibly have, such as: B. an exemption from a homestead.
These estimated values, in turn, inform tax authorities like cities and school districts that set a tax rate to generate income. Instead of a state income tax, property taxes fund a wide range of services, said Jack Barnett, HCAD’s chief communications officer.
“Property taxes support important local services, primarily education, but also police, fire services, road maintenance, parks, libraries, all of those things that make a community more livable,” he said.
Valuation districts use a process called bulk valuation that examines comparable properties in an area to determine a baseline market value. However, at the door-to-door level, this can create inconsistencies.
Drew Wasson, a Jersey Village councilor who has lived in the area since 2004, said the rating district’s algorithm could make it difficult to pinpoint these discrepancies in ratings.
“They might put in some market variables and then all of a sudden you let the computer work and sometimes they spit out a number based on square footage or measurements or other things that just number is inconsistent with other parts of the neighborhood,” he said.
Jersey Village residents, in particular, have seen their property values escalate notably over the past five years as both land and property prices have risen, Wasson said. Since the district also includes land values in addition to buildings, the value of a property can also increase from year to year as the area becomes more attractive.
“This is where it gets difficult between valuation and real estate because if the properties in your neighborhood go up because it’s a desirable neighborhood, the market value of your home will go up,” said Barnett.
Texas nondisclosure laws prevent sales prices from being published, so the county relies on data provided by third-party companies to get a sense of property trends. The county also takes into account changes – from new fences to a patio – as well as the overall quality of a structure.
The appeal of the protests
With an appraisal, homeowners have a choice: either accept the number or lodge an objection – either on their own or by hiring a consultant. The protest period usually falls on May 15 or 30 days after the appraisals have been sent, whichever occurs later. The county accepts both paper forms and online submissions through its iFile system.
“The purpose of the property tax system is essentially to value properties in the market,” said Bettencourt. “So if you have a case and you think your property value is incorrect, protest.”
Submission will be followed by an informal meeting with a district appraiser who may provide a revised assessment. The owner can accept or refuse, and if they do not agree, the case can be referred to the appraisal committee.
This body serves as an independent body to settle disputes between property owners and the assessment district and holds 1,500 panel hearings daily from May to August. The complainants have 15 minutes to present their case in front of three board members.
A real estate tax advisor who pays 20% -50% of the tax saved is the preferred choice in Harris County as over 68% of real estate owners choose this option when following a protest. However, according to a January 2019 report by Advisors, there was no significant difference in performance between homeowners who hired a company versus those who led a protest alone.
Wasson said he chose to file his own protests in the past because of the cost savings and because he had more control over the entire process.
“A property owner could very well achieve better results than a consultant because they are so much more familiar with the property,” says Darlene Okonski, homeowner tax advisor at Marvin F. Poer and Co.
Protest activity has been on an upward trend for at least the past decade, with the number of contested accounts increasing by nearly 30%, according to HCAD data.
These complaints are increasingly being resolved beyond the ARB process, with ten times as many cases going to arbitration in 2019 as in 2010 and almost three times as many cases going to court. Many of these cases involve commercial, industrial and multi-million dollar apartment buildings, Barnett said, which are subject to higher growth rates.
Reforms in the 2019 legislature were mainly aimed at corporate taxation, with a 3.5% cap on annual revenue increases and government funding to make property taxes slightly lower for schools.
Bettencourt supported several follow-up laws that were passed this spring. Some of these measures included the ability to correct assessment errors and clarify that exemptions from disasters only apply to physical disasters and not to events such as pandemics or droughts.
In the meantime, taxpayers continue to have the protest process to lower their own tax obligations each year. Thomas said she believes everyone should protest their valuation regularly to keep tax bills manageable.
“I would advise everyone to do it, whether you do it yourself or choose a company to represent you. It will be to your advantage if you lower it, ”she said. “You will increase the amount of your report every year, come what may.”