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To the good folks who’ve moved to Texas in the past year in record-breaking numbers from California, Florida, Louisiana and a whole bunch of other places:
I hope by now you’ve figured out a few things.
Don’t use your car horn if you can avoid it.
High school football coaches get paid a lot. Math teachers? Not so much.
Chili is the official state dish. Chicken-fried steak MUST be served with white gravy. On your barbecue plate, if you want more vegetables and salad, go back to California.
Oh, and you’re getting shafted on your property taxes. Somebody should have filled you in when you bought that new McMansion with your California home sale proceeds.
So it’s OK to be confused. Indeed, everybody is confused. Even someone like me, who’s lived here 29 years. I’m confused.
Actually, I’m angry. People are losing their homes because they can’t afford steep tax bills.
Since this is the last weekend before the May 16 deadline to officially notify most appraisal districts that you intend to protest, I thought that as The Watchdog I could explain the system to you in the simplest of terms, quick and efficient, unlike the property tax system.
Let’s go.
In the magic kingdom called Texas, there is no state income tax. Sure, the air is dirty, the politics are raw, and one man, Jerry Jones of Arkansas, keeps breaking peoples’ hearts by putting losing teams on the football field year after year (but that’s another story).
Yep, no income tax, but they gouge you other ways: They increase fees, they say, “not taxes.” It’s a difference in wording.
Our sales tax on some items is usually 8.25%.
But the real sting comes from the property tax, where they play numbers games with different categories. You get an appraised value and a separate market value and even a land value.
Follow me here. The appraised value is what your property tax is based on (we’ll get to that). And it’s capped at a 10% increase each year. The market value, which has no cap, is what they think your house is worth on the open market. You challenge the market value if you don’t like their numbers.
Who is “they”? “They” is your county appraisal district, which hires appraisers to estimate the value of your home. They’ve never gone inside. Likely, they’ve never even driven down your street. But they pick a number, and you get it in the mail. Most people ignore it and move on with their lives.
Five years ago, I launched a movement called “Everybody file a protest” to get people to understand the crazy system. I showed a few ways to protest and immediately heard from people who were shaving hundreds and even thousands of dollars off their property tax bill.
Some hire property tax consultants to help them.
In general, if someone protests on their own or hires a consultant, they might lower their tax bill. Meanwhile, neighbors might pay more because they aren’t paying attention. You can find this scenario on many residential streets. Advantage often goes to the protester.
Yet the state property owner “bill of rights” says owners are entitled to “equal and uniform value.” State law says that each property should be assessed “at its fair value.”
To lighten the load, politicians have awarded us homestead exemptions that serve as discounts.
Say your house is valued at $100,000. But you get discounts for it being your primary residence, for being disabled, over 65, a disabled veteran or their surviving spouse.
So with a $25,000 exemption, let’s say, that $100,000 in taxable value is knocked down to $75,000, and if you protest maybe even more.
The appraised value is multiplied with each local government’s tax rate, which are set in the summer. Governments that set an annual tax rate include the school district, city, county, public hospital, junior college and others. The result of this math is your property tax bill.
The public, outraged about taxes, could show up at these summertime budget meetings and demand a lower tax rate, but few do.
It’s a big blame game. The appraisal district says high taxes are the elected officials’ fault. Elected officials say appraisal districts are responsible. They’re both to blame.
We used to get a line on our appraisal notice guessing the estimated tax bill. That drove people to protest, so it’s been removed from most county appraisal notices. Instead, we receive a postcard later in the year sending us to a website where our tax details are listed. A lot of people think the postcard is some kind of scam and toss it.
How can you use this final weekend to decide whether you want to file a protest before the deadline? First, understand that protesting is a good thing. It’s not going to get you in trouble. It’s baked into state law which promotes protesting as your right as a Texan. Your protest is supposed to instill fairness into the system. (Cue the laughter.)
There are two basic ways to protest, amidst other techniques. The first is comps, or comparable properties. You can ask a real estate agent to look them up for you. There should be no charge. Texas real estate sales prices are kept secret from the public, but not so much from those in the industry.
Comps show home sales in your neighborhood, and that’s supposed to be an indication of what your house is worth. So if your value is higher than recent sales, good for you. You can show they overpriced you. But that’s not going to work so well this year for many owners because home sale prices have skyrocketed.
The second way is what I’m trying this year. Pretend you’re on an episode of HGTV’s Flip or Flop show. Take photos of all interior areas that need upgrading to make your home presentable to a homebuyer. The appraisal district doesn’t know what’s going on inside your house. Written estimates from contractors could help bolster your evidence. You can get this ready before your hearing.
An early decision might happen informally, by email, phone or by personal visit to the appraisal office (if allowed). Districts obviously like to cut down on their hearing numbers. Some protesters win before a hearing. But for those who go, you face off against a county appraiser and the Appraisal Review Board.
Every county has its own way of doing this. What works in Dallas County might not work in Tarrant County. If it all feels very arbitrary, that’s because it is.
Bottom line (and this really is a bottom-line matter): If you protest and get your appraisal numbers to drop, it builds a lower base for them to use in future years. Lower base means lower taxes.
Remember, for most, May 16 is the protest deadline.
Good luck, and welcome to Texas.
Final note: Denton County’s protest deadline is on track to hit an ultra-late June 30 for many property owners. I’ll tell you why in The Watchdog’s next column.