This article is based on the personal experience of the author, who is not a legal or tax professional, and does not reflect the views or opinions of Lennar Corporation or its affiliates. It is not intended to provide any tax or legal advice, and you should consult your own accounting, legal, and tax advisors to evaluate the risks, consequences, and suitability of protesting your property tax appraisal.
For most homeowners, the final months of the year deliver no greater scare than notice of property taxes. This compulsory contribution funds local services including police and fire protection, road maintenance, sanitation, public schools, libraries, hospitals, parks and other recreation. Paying these taxes is unavoidable; however, you may be able to lower them if you protest the tax assessed value of your home. This article outlines the steps to protest, including tips for building your case and a summary of appraisal review board (ARB) hearing procedures in Montgomery County, Texas.
Please note: There is no guarantee that the county or other jurisdiction in which your home is located will apply or follow the same or similar standards and procedures (listed here) for issuing tax appraisals, hearing protests, and imposing property taxes. Inquire with your appraisal district (AD) and taxing authority for the proper procedures. If you are in the market to buy or you recently purchased a new home, you might ask your real estate agent and neighbors about the taxing history of your property and the area, respectively.
Step 1: Understand the tax appraisal
If you are not already familiar with tax appraisals, let’s take a moment to understand this method of property assessment and how it impacts your property taxes. For starters, the county or other jurisdiction in which your home is located pays for each appraisal, so the timing between assessments may occur annually or every three to five years. The exception to this can be that upon sale of a property, it must be reassessed.
Appraisals typically fall on January 1. An appraiser (or assessor) at the AD office will use one of three approaches to assess your property: (1) sales comparison approach, (2) income approach, and (3) cost approach. We will review the sales comparison approach, as it is the most commonly used approach in valuing single-family homes.1 The appraiser looks up comparable sales (or comps) for properties similar to your own, located in the same geographic area, which sold in the last six to twelve months. He or she considers additional factors, such as age, size, condition, quality of construction, and recent improvements, and then estimates the market value of your property. The market value is how much your property could sell for on the open market.
Depending on where you live, the tax assessed value of your home may not be equal to your market value. Some states use 100% of the market value to determine what a homeowner will pay in property taxes, while other states use an assessment rate that is a percentage of the market value. For example, in a state with an assessment rate of 80%, a home with a market value of $150,000 would have a tax assessed value of $120,000. The governing tax authority then applies the property tax rate to the tax assessed value to calculate your annual property tax. The higher the assessed value, the more you will typically pay in taxes, and this is why you may want to protest the tax appraisal – to ultimately pay a lower amount in property taxes.
You may already have a case because appraisers rarely visit your home or the comps to complete their assessment. Instead, they often pull details from an online multiple listing service (MLS). While this method may streamline the appraisal process – keep in mind, the AD can have hundreds of properties to assess with insufficient time or manpower to do so, mistakes can be made, including the misinterpretation or complete oversight of pertinent details. For example, the appraiser may not be aware of damages, repairs, improvements or renovations done to your home or the comps that can impact their market values.
If you believe your property has been improperly assessed, you may file an appeal. Four commonly accepted reasons for filing an appeal are: (1) excessive value, (2) unequal appraisal, (3) declined exemptions, and (4) lack of notice from the AD. Excessive value means you feel the appraiser valued your home too high, while unequal appraisal suggests an appraiser’s assessment of your property is inconsistent with other similar properties. Homestead exemptions remove a fixed dollar amount or percentage of a home’s assessed value from your property taxes; if the appraiser denies your exemption, you may be able to file an appeal. Finally, if the AD failed to notify you of a change in your home’s assessed value which consequently increased your tax liability, you can usually protest this as well.
Step 2: Get your notice of appraisal
Notice of appraisal should come to you in the mail from the AD office within a few months of the assessment. In Montgomery County, Texas, tax assessments are distributed by April 1, but your jurisdiction may follow a different schedule. The notice will declare the assessed value of your home for this year (and often the prior year for comparison) and the resultant property taxes. It may identify the taxing entities you will have to pay and explain how to file a protest, with the deadline to file. To collect information the AD used to determine its assessed value of your home, skip to Step 4.
Step 3: File your protest form
You typically have a short window of time (sometimes 30 days) from when you receive the notice of appraisal to file an appeal. In Montgomery County, Texas, the deadline is May 15th. The AD is likely to receive many protest applications from other homeowners, so if you decide to protest your appraisal, you will want to get your application in early to secure a hearing date.
A protest form may come with your notice of appraisal, or you can typically file one online through the AD website. Sometimes, though, it is better to write a formal letter to the ARB, in which you request a formal hearing to protest. Whichever way you choose to file an appeal, you should identify your basis for protest and provide all the requested information. You may have the option to withdraw a protest if later you find it invalid, and this should not hurt your case. Furthermore, filing a protest should not hurt your property’s resale value, nor will the AD retaliate if you protest. It is your legal right to seek a better appraisal and taxes.
In your letter and/or protest form, you should state the value you think your home is actually worth. Just as the assessor based your home’s assessment on objective evidence like comps, age, size, and other property attributes, you too should have objective evidence supporting your alternative assessed value. However, if you are not yet sure what that value is, you could temporarily omit this detail and, after gathering your evidence, state a value at the hearing.
You may improve your chances of securing a hearing if you hand-deliver your letter and/or protest form to the AD office. The office should give you a date-stamped copy of the document as proof of receipt. You may also be able to complete Step 4 while you are there.
Response times vary, and in Montgomery County, Texas, it can take anywhere from two weeks up to a month to receive notice of the ARB’s answer to your request to protest. Notice typically arrives in the mail, and if the ARB approves your request, the notice will state the date, time, and location of your hearing. You might also receive a copy of the comptroller pamphlet, a copy of ARB hearing procedures, and instructions for the request and attainment of any relevant, non-privileged information the AD plans to use at your hearing.
Step 4: Request AD evidence
Upon request, you are generally entitled to receive a copy of the information the appraiser used to assess the value of your home and which will be used by the AD’s representative at your hearing. To obtain this information prior to your hearing, you may be required to fill out another form or pay a small fee. Most jurisdictions require the evidence be provided to you within a certain number of days of your hearing. In Montgomery County, Texas, the AD must share their evidence at least 14 days prior to your hearing, assuming you submitted the request in a timely manner. If your hearing date is approaching, and you have not received anything, call the AD to inquire about the status of your request. You may also wish to request an extension of the hearing, if possible, so that you have adequate time to review the assessor’s information beforehand.
Some details may be searchable online at the AD website. Ideally, your copy of the district’s evidence should include the following:a. Information about your property including its homesite size, square footage, age, amenities, sales history, zoning, and more.
b. Uniform and Equal Comparables Report – A list of assessed values for comparable homes in your area.
c. Comparable Sales Report – A list of the recent selling prices for comparable homes near yours.
d. (Possibly) Residential Sales Book – A list of those properties in your neighborhood that sold in the last year which were reported to the AD.
e. (Possibly) County List Value Improvement Properties – A list of appraised properties in your area that have improvements. An improvement is the term used for any structure built on raw land to make it more usable.
f. (Possibly) County List Value Land – A list of raw, undeveloped land in your area.
The last three components, if provided, may not be necessary for building your case; however, it could be helpful to review those lists with an AD appraiser to better understand them.
Step 5: Research / Build your case
Start by carefully reviewing the AD evidence provided to you in Step 4. Did they list your property correctly? What about the comps? Remember, the AD assessor may not be aware of any remodeling or renovations done to those properties they have listed as comparable to yours. Improvements raise sales prices and market values. Ask your real estate agent, if you have one, to send you details on the comps. If there are differences, find your own (new) comps to present at the hearing. Search for properties similar to yours and estimate their values by adding or subtracting adjustments for positive or negative features. Your real estate agent can help you find useable sales comps as well.
Another issue to look for is if the assessor erred in measuring your home. If he or she made such an error, collect blueprints, deed records, or a property survey to show its correct square footage, homesite size, and zoning. What about the floorplan? Verify the number of bedrooms and baths, garage capacity, and the presence or absence of special features in the appraisal.
At your hearing, the ARB will probably ask what you think your home is worth, and you must provide evidence that shows why the market value of your property is less than what the assessor noted. Gather supportive documentation including photos, contractor reports, repair estimates, and receipts. The ARB will consider most issues if they occurred before the date of the appraisal.
In limited circumstances, you may be able to protest items you discovered after the assessment date. Speak with your local AD assessor, tax or legal professional for examples, and additional guidance and assistance in such special cases.
Always check with the AD to find out what evidence will be admissible at your hearing. Once you gather all relevant information, organize it in a presentable format. You should print hard copies and sort everything into binders – one binder for each board member, the AD representative, and yourself. You may also be able to present your evidence electronically, but not all AD hearings follow the same standards, so ask ahead of time. The AD can tell you how many members will be present and which electronic devices are allowed.
Step 6: Practice your presentation
Just like with anything, practice makes perfect. At the hearing, you will have a short amount of time to present your evidence and make a case for your protest. In Montgomery County, Texas, your allotted time is no more than 15 minutes. Grab a stopwatch and run through your presentation a few times. Cut out unnecessary content and stick to the facts, starting with your strongest arguments. If it helps, write your points down on notecards.
You have the option to hire a licensed agent to present your appeal on your behalf. Most jurisdictions will require you file a form, identifying your representative, with the AD prior to your hearing date. In Montgomery County, Texas, this is called an “Appointment of Agent” form. You may also be able to authorize a spouse, family member, or friend to represent you.
If you cannot appear in person before the ARB, you may be permitted to request to appear for the hearing via a telephone conference call. A telephonic hearing could require you to submit all evidence in the form of a sworn (under penalty of perjury), notarized affidavit. The affidavit and all supporting documents must be mailed to the AD prior to your hearing. Check the deadline to submit, and make sure you provide everything in a timely manner. Request a return receipt for your records.
If neither you nor another person acting on your behalf is available to appear at the hearing, it may be possible to submit all your evidence in the form of an affidavit, and then the ARB will review and judge the protest without an in-person or telephonic hearing. Keep in mind: this option limits your argument, as you will not be present to answer the ARB’s questions, examine witnesses, or refute the AD representative’s claims.
Step 7: (An Alternative Step) Challenge your appraisal informally
Prior to your formal hearing, you may be able to meet with a district appraiser to discuss your property informally. This informal meeting is an attempt by you and the appraiser to resolve your protest without having to go before the ARB. This offers you a great learning opportunity, as the appraiser can answer your questions and explain the appraisal process with all its methods and influential factors. You should bring all your evidence, organized in a binder, and have spare copies to give the appraiser.
Approach this meeting in a calm, polite manner; the appraiser is not out to get you or your money. Prior to this, an appraiser – not necessarily the one you are meeting with now – made an objective, unbiased opinion about the value of your property based on the information available to them. You are now bringing additional facts and corrections in data so that this appraiser can make a well-founded adjustment to the value.
At the end of your informal session, the appraiser may offer to settle your protest by adjusting the assessed value downward. Should you accept their offer, your case closes right then and there; you will not attend your hearing with the ARB, nor can you appeal this outcome with a lawsuit. The results of your informal hearing will be final for the tax year. If, however, the appraiser refuses to adjust the assessed value, or if they make an offer you are not satisfied with, you can reject their offer and proceed with the formal ARB hearing.
Step 8: Go to your formal hearing
Hearing procedures with the ARB may differ between jurisdictions. Refer to the ARB instructions, policies, and/or procedures – you may have received these in Step 3 – to be better prepared. Proceedings can be very similar to what you find at a small claims court. Most hearings are open to the public, but you and the AD representative could file a joint motion for a closed hearing if confidential information will be presented.
Assuming you have chosen to attend the hearing in person, arrive early on the day of your hearing. This gives you a chance to sign in, if necessary, and prepare your nerves; you may even be able to watch the protest before yours to see how things play out. When it is your turn, the board or its chairman will likely start the hearing by announcing your name, protest number, property address, and other identifying information. All ARB members may affirm they have not discussed the case with anyone, including you. Just so you are aware: With the exception of your tax or legal representative, you cannot discuss your case outside the hearing, especially not with a member of the board, or you risk your protest.
The ARB may request that all electronic or written evidence be provided now before it welcomes the challenging parties and reviews hearing procedures. Witnesses are examined and must disclose their credentials and in what manner they intend to participate in the hearing. All testimonies are given under oath.
Now that initial steps are complete, the parties typically present their cases one at a time. The ARB may give you the option to present your argument before or after the AD representative. Each party will present their evidence and examine witnesses for their side. When each party is finished, the ARB may ask a few questions before turning things over to the other party. Some jurisdictions may allow parties to cross-examine each other’s witnesses and offer rebuttal evidence. Neither party can examine ARB members.
When both sides are finished, the parties may be given the opportunity to present a short closing argument. This is your chance to sum up the evidence, succinctly point out the flaws in the assessor’s appraisal, and state the ARB determination being sought after. The board then closes the hearing and withdraws to discuss the case. Take a breath because the hard part is over; all you have to do now is wait. The ARB usually calls for a separate motion on each matter of the case and casts a vote. Votes are often recorded, and when deliberation ends, the board announces its determination(s) of each subject of the hearing and its opinion of your home’s value. Parties should later receive an official order of determination of protest in the mail.
Step 9: (Optional) Appeal the ARB’s decision
If you are unsatisfied with the ARB’s decision, three options may be available to you. First, you can request binding arbitration, which means an independent authority hears the evidence at a forum and makes a decision that is legally binding. Second, you could try to appeal to the state district court in your county to review the decision and your arguments. Check the timing though, as some jurisdictions give only a short amount of time to appeal an ARB decision. Finally, you may be able to appeal to a higher administrative office if your property was appraised at a value over a certain threshold. In Montgomery, Texas, this body is the State Office of Administrative Hearings (SOAH), and the threshold is $1,000,000. Other criteria for this method of appeal may apply, so do your research. In fact, each of the three options to appeal ARB findings will likely require your case to meet special conditions, and you will have to discover on your own, or with the help of a tax or legal professional, how your case may or may not qualify for further appeal.