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Property Owners Beware: You May Want to Protest Your Property Tax ValuationThe time is quickly approaching when you will receive your property tax valuation for 2004. As you probably know this is the valuation of your property and its improvements upon which you pay property taxes to the city, school district, county and other special taxing districts. When you receive it, review it carefully, because counties are notorious for rendering inflated appraisals. Property owners in Texas pay property taxes each year that are approximately 3% of the value of the property, depending on its location. In the current economic climate, many taxing entities are looking to their local property taxes to offset significant downturns in their sales tax revenue. In addition, counties that are growing rapidly, like Collin and Denton, often render inflated appraisals from one year to the next based upon "comps" that reflect future value rather than a true existing value. We had a case last year where the Tarrant County Appraisal District assessed a client's property at double the valuation of the year before. This area of Tarrant County is similar to Collin and Denton Counties as it is by the airport and growing rapidly. We obtained a 45% reduction of the appraisal value. Consequently, property owners must be increasingly wary of the tax appraisal of their property and the tools they have to contest an inaccurate valuation. Section 41 of the Texas Property Tax Code gives taxpayers the right to protest the valuation of any property subject to taxation, including commercial, residential and business personal property. Lessees obligated to pay applicable property taxes are also given the right to protest, but only one protest per property is allowed (both the lessee and the property owner could not both bring a protest). The protest consists of a public hearing in front of three or more members of the appraisal review board. It may involve examination and cross-examination of witnesses, offering evidence, and arguments on the matters subject to the hearing. The statute requires that the hearing be as informal as practicable. The initial process is simple. There is an area on the notice where you can elect to protest. If you indicate a desire to protest then the Appraisal District will either modify your appraisal without a hearing (which is rare) or notify you of a date for a formal hearing which will be held within 30-60 days after you submit your protest. The form itself will have "detailed" instructions of your rights and how to protest which you must follow specifically. If you fail to follow all the steps carefully, especially the appeal date cutoff, you will lose your opportunity to protest and the valuation will be final and conclusive. In a protest, appraisal districts are given the burden of establishing the value of the property by the weight of the evidence presented at the hearing. The owner or owner's representative should come to a protest armed with as much data as possible to support the valuation he feels is correct. The factors generally considered by the appraisal review board include neighboring valuations and the sale of comparable properties. A protesting owner may introduce any evidence he chooses, but certain evidence may be more effective. The best evidence is a current independent appraisal. Also, evidence of obsolescence, either external or functional, should be conveyed clearly and with statistics and/or photographs to emphasize the impact on the value of the property. External obsolescence are those factors which are beyond the owner's control, such as environmental, noise and poor access. Functional obsolescence stems from problems within a property that negatively impact its value, such as design flaws, lack of central air conditioning, or a lack of appropriate wiring. For example, if your property has a large, air conditioned space that cannot be leased, such as a waiting area or atrium, this unrentable square footage can be shown to diminish market value and increase operating costs, which will negatively impact its value. Also, simply because a property close to, or adjoining yours, commands a valuation based on its use does not necessarily mean your property should deserve the same or similar valuation. Once obsolescence, defect or inconsistent use has been established on the property, the tax savings may be significant, and will continue each year as long as the problem exists. If the protest is denied, then your recourse is the courthouse. This is why it is important to have an attorney advise you in the very beginning so he/she is familiar with your property and valuation issues. Your attorney will make sure you strictly comply with the protest procedures and be able to gather and coordinate the evidence in the event a lawsuit is necessary. We, at Strasburger, are very experienced in this procedure. We have handled many cases of this nature. We entertain contingency cases but we also advise you as to whether this is a cost effective way of pursuing the case. Remember, READ your notice and call your attorney. If you believe your valuation is wrong, we can help you.
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