Do it Yourself

Do-It-Yourself Property Tax protest

For those who want to try and protest their property taxes themselves, here is an Excel spreadsheet, courtesy of Edd Hendee. Please download and save to your computer, if you have Microsoft Excel..

[link to the property tax protest spreadsheet]

If you change your mind before you have your ARB hearing, and want to secure professional assistance, please call or email your request.

Please refer to these comments in filling out the spreadsheet
Reprinted with permission


Tuesday, May 31, 2005

Hendee’s Handy-Dandy Appraisal Protest Form

by David Benzion | 05/31/2005 7:10 am

You demanded it– now it’s here– Edd Hendee’s Handy-Dandy Property Tax Appraisal Protest Form

It almost makes wasting your valuable time to try to convince the government you deserve to keep more of your own money fun! Almost.

And be sure to read further to learn valuable tips from LST readers and CLOUT members on how to successfully protest your appraisal.

TIPS TO SUCCESSFULLY PROTEST

Disclaimer: The information and suggestions presented here may be useful and relevant information for protesting taxes in Harris County.  They may be applicable in other Appraisal Districts as well, but local procedure may differ. Tips provided by John Rivard are based on his serving four years as a member of the Harris County Appraisal Review Board, 1998-2001.  They do not necessarily represent the views of the Appraisal Review Board or The Harris County Appraisal District. Tips provided by Tom Bazan are based on his long-term reputation for pro-taxpayer activism. The writers, CLOUT, LST and KSEV make no warranties or claims regarding the accuracy or usefulness of the information presented below. Use of this information is no substitute for professional or legal advice, or for your own common sense.

More great tips, this time from CLOUT member John Rivard:

INTRODUCTION

So you’re planning to protest the value of your residential property because you believe the Appraisal District has set the value too high.  Good!  It’s your right to do so, and you help ensure the integrity of the overall appraisal process by participating.

To be successful you need to understand the process, have well-organized information to defend your opinion of value, and most of all, be prepared!  These hints on protesting the value of your property may be helpful.

UNDERSTANDING THE TERMS

You will receive your notice of appraised value in the mail, usually sometime in April or May.  It will give you last year’s value, the current year market value, and the appraised value.  It is essential that you understand the difference between these terms.

The market value is the value that your property should have on the open market between a willing buyer and a willing seller.  The market value is the value that you will be protesting.  It is the value that – by state law – the Appraisal District and the Appraisal Review Board are required to determine.  It can be higher than your appraised value.

The appraised value is the value that will be used by the taxing authorities to determine your taxes for the current year.  It can be less than the market value, if your property has been increasing rapidly in market value.  This is because the current state law limits the increase in your taxable value to 10 per cent per year.  This is the 10% cap rule, and results in the terminology of your value being “capped.”  It applies only to residential properties, not businesses.

In review, your appraised value for tax purposes in the current year cannot be more than 110% of last year’s value for a residential property.  If your market value exceeds 110% of last year’s value, you will have a market value, and an appraised value, which is lower.  Remember that the appraised value is determined by arithmetic based on last year’s appraised value and the 10% cap law.

You cannot protest the appraised value, precisely because it is determined from last year’s appraised value, which may increase (under current law) by up to 10%.

But you can protest the current year market value, and should do so if it is out of line with comparable properties in your neighborhood.

If your property is not capped by the 10% rule, a successful protest will directly reduce your appraised value (hence taxes) for the current tax year.  In this situation your market and appraised values will be identical.

If you property is capped by the 10% rule, a successful protest may or may not reduce your appraised value for the current tax year, depending upon how much reduction in market value you achieved in the protest.

For example, suppose your property is noticed at a market value of $100,000 and a capped (appraised) value of $95,000.  In case 1 you protest and get the market value reduced to $90,000.  Your new market and appraised value becomes $90,000, and your tax liability is reduced accordingly.  In case 2, you protest and get the market value reduced to $95,000, which becomes your new market and appraised value.  You have successfully reduced the market value, but not your tax liability.  In case 3, you protest and get the market value reduced to $97,000.  Your appraised value remains capped at $95,000, and you have not reduced your tax liability for the current year.  You have however, obtained a lower market value, which could result in limiting your tax liability the following year.

You should always consider protesting market values that are out-of-line high because it is important for future years to keep your market value in line with comparable properties.

UNDERSTAND THE PLAYERS

The Appraisal District comprises paid personnel working under the direction of the Chief Appraiser.  These are the staff personnel that do the year-round work of setting market values for all properties in the County.  You will interface with appraisers and clerks.

The Appraisal Review Board (ARB) comprises citizens who live in the county.  They are responsible for hearing complaints by property owners (you) or by taxing authorities.  The Board members are appointed by the Board of Directors that oversees the entire Appraisal District, and are term-limited to three 2-year terms.  They are not employees of the Appraisal District, and are independent, being supervised by officers elected by the ARB members from among their group.  In Harris County the ARB functions as three-person panels to hear individual protests by property owners.  ARB members view property owners and the taxing districts as their customers and as the public that they serve.  ARB members do the best job they can with the info presented to them by the property owner and the district to determine the fair market value of a property.

UNDERSTAND THE PROCESS

When you file a protest, you will be notified of the date and time for your appearance at the Appraisal District offices.

You will report to an assembly room, and then wait to be called for your appointment with an appraiser.  This meeting with an appraiser is called the informal conference.  It will take place in the appraiser’s office or cubicle, one on one.  This is your first opportunity to reach agreement on a satisfactory market value for your property.  Many cases are settled during the informal conference.

You will present your information and opinion of value to the appraiser in an informal give and take.  You should state your opinion of value, present supporting information, and then give the appraiser time to consider your information and check against their own data on comparable sales.  (It’s a good sign if the appraiser is busy at the computer and making calculations.  Stay quiet, and let them consider if an adjustment is indicated.)  The appraiser will advise you if, in his/her opinion, a lower value is indicated.  If you reach agreement, you can sign the papers right there, and go home.

If you cannot reach agreement with the appraiser, you have the right to take your protest before a three-person panel of the Appraisal Review Board (ARB).  This is called the formal hearing.  It will take place within a short period of time the same day, in the same building.  You will return to the waiting room to be called to the formal hearing, which will take place in a small room.

All formal hearings are open to the public, but the usual players in the room include an appraiser from the Appraisal District (not the same one who conducted the informal), a clerk who does paperwork and records the hearing, a three-person panel of the ARB, and you.  The hearing will be conducted by the Chairman of the ARB panel, following a standard protocol.  The protocol includes introductions of the persons (so that you know the players), a brief description of the process that will be followed, exchange of information (during which time you provide the ARB three copies of your information packet), and a legal description of the property by the district.

(Note: Any major dispute about the description of the property – for example, square footage off by more than 10% – will be resolved at this point.  If unable to resolve a dispute that may significantly affect the market value, the Chairman of the ARB panel has the option of recessing the hearing for field check by the District.  In this event, the hearing would be continued at a later date after the field check.  This occurs in a small number of cases.)

During these preliminaries, the ARB members will be examining a packet of information on your property provided by the District.  This allows them to become quickly familiar with the property.  You will be given the same packet.  It includes a fact sheet about your property, and a listing of comparable sales.

The formal hearing will continue with the property owner’s presentation.  When you begin your presentation, the ARB members will be following the info in your packet.  When you have completed your presentation, they will ask you questions.

Then the appraiser will make a presentation on behalf of the District, citing information in support of the District’s opinion of value.  When complete, the ARB will ask questions of the appraiser, and perhaps of the property owner to clarify any issues raised by the appraiser.

After final comments, the ARB Chairman will close the record, and the panel will reach a decision on their opinion of market value, right in front of you.  The ARB’s determination will be read into the record, and the hearing is over.  The entire process will take about 20 minutes.

Note that the ARB panel is not bound by any offers made by the District in the informal conference.  ARB members are independent, and reach their own conclusions.  In a few cases, the ARB panel may determine a market value higher than offered by the District for settlement in the informal.  Not often, but it happens.

The ARB determination of your property’s market value is final, unless you choose to litigate in court.

YOUR PREPARATION

Preparation is the key to a successful protest. Here are some hints.

  1. Assemble a packet of information that includes a summary sheet, photos, a comparable sales analysis, and perhaps an analysis of the noticed market values for similar properties on your street.  Other supporting info could include a plot plan of the properties on your street, a copy of your notice of value from the Appraisal District, and a listing of the comparable sales that you used as the basis for your comparable sales analysis.  Prepare five identical copies of this packet, one for the District, one each for the three panel members, and your own copy.  (Photos can be one copy only, passed around at the hearing, but photos reprinted from a computer as part of each packet are even better.)
  2. The summary sheet should include a brief description of the property, date purchased and amount (if within the past 10 years or so), proposed market value, your opinion of market value, the basis for your protest (over market value), and a listing of the contents of your packet.
  3. Photos should be recent (within the last year), including a front view from the street, and perhaps a back yard view.  The purpose of the photos is to quickly satisfy the ARB’s need to understand “what does the property look like?”  (Present photos even if the house looks spectacular.  ARB members appreciate photos.)  Also, if you intend to argue that there are significant deferred maintenance or structural problems with the property, detailed photos to support your claims are necessary.  (Example may include photos that show significant overall deterioration, structural problems due to foundation problems, termites, or other damage.)  Label all photos.
  4. In most cases, your analysis of comparable sales is the most important part of your package.  It is best done in an Excel-type spread sheet, using sales of comparable properties in your neighborhood within the past 12-18 months.  The idea is to show that your property is appraised too high on a $ per square foot basis compared to actual recent sales of similar sized properties in your neighborhood.  You can get a limited number of sales in your neighborhood from the Appraisal District web site, for your property.  A more comprehensive list of sales for your neighborhood (called a “Transaction Report”) can be obtained at the Appraisal District Office in advance by going to customer service.  You should do this several weeks in advance, and select recent comparable sales from this report.  The District will also provide to you a listing of the comparable sales they intend to use in the hearing, but you need to begin your preparation long before they provide this to you.  Keep in mind that you have the advantage of being able to out-prepare the District.  This is because you have only one property to prepare while they have thousands.  You can come in with a completed spreadsheet while the District assessor will pick sales off their list on the spot during the hearing.  Keep in mind that comparable sales selected for analysis should be about the same size (both land and main structure) as your property, and in your neighborhood.  If land sizes vary significantly from yours, prepare your analysis by deducting the land value for each comparable sale (from the District’s web site for each of those properties), so that your $/sq. ft. analysis is for the structure only.  Similar adjustments can be made for swimming pools.  One additional note on the process is that some Appraisal Districts adjust the actual sales price of properties upwards to project the price to Jan. 1 of the current year.  The older the sale, the bigger the adjustment, but both actual and adjusted price are shown on the District’s sales info.  You can deal with this straight up by using both adjusted and actual prices in your comparable sales analysis (thus out-preparing the District by having both an inflated and un-inflated value for your property), or by choosing only the most recent sales for your comparables.  ARB members are accustomed to dealing with either set of numbers.
  5. In many cases, your property may be above market value because it has serious problems that affect its market value.  In this case, you still need the comparable sales analysis to show what the market value would be if it were a typical property.  Then, you start presenting the evidence of significant deducts for deferred maintenance or deterioration, foundation, termite or other damage, with $ price tags assigned to each.  Documentation is essential.  For example, if your house has a foundation problem, have at least one estimate from a reliable firm for the cost to repair.  Likewise for termite or structural damage, or substantial deferred maintenance.  Photos of such problems are essential.  (Note:  Don’t try to nickel and dime on deferred maintenance.  Items like overdue painting, an aging roof, bad fence and cracked driveway are common.  The District doesn’t increase your value when you get a new roof or replace the cracked driveway, and you can’t count on a decreased value prior to repair.  But if you can show an aggregation of problems and deferred maintenance that definitely would impact what a buyer is willing to pay, you can make a case.)  Also, be aware that the date of record for determining the value of your property is as of Jan 1 for the tax year in question.  If the property had a significant problem on Jan 1, and it has since been repaired, you can present your actual cost as a basis for adjusting downward the value on Jan. 1.  Conversely, if significant storm or fire damage occurred after Jan 1, you’re out of luck for the current tax year.  That’s the law.  (But you need to notify the Appraisal District so they can make an appropriate adjustment to value for the following year.)
  6. An “unequal appraisal” analysis is also a basis for protesting your market value.  But unequal appraisal is a complicated and difficult case to prove.  (If you are determined, the Appraisal District has information of preparing an unequal appraisal protest.)  However, an analysis that shows that your property is out of line high on a $/sq. ft. basis compared to the noticed market values of other properties on your block (assuming they are similar), can be useful, in support of your contention that the value is too high.  This analysis is also best done on an Excel-type spreadsheet.  But use it as supporting information that the market value of your property is out of line high.  In most cases, the ARB members are more likely to be influenced by this information than the District.  In short, if an appraisal analysis of all the properties on your street helps make the case, use it, but in a supporting role.  Do not use the phrase “unequal appraisal” unless you do the homework necessary to protest in accord with the District’s guidance on unequal appraisal.
  7. Practice your presentation.  Be able to make it in four minutes or less.  The ARB panels are very good (practiced) at reviewing the written information and listening to you at the same time.  They appreciate a well-prepared, documented, concise presentation.  The better prepared, the more concise you can be.
  8. Never lie.  First, you are under oath.  Second, if a panel member catches you in a lie (or avoiding a direct answer to a question) you have lost your credibility, and probably your case, not to mention your integrity.  Your integrity is the most important asset you have in the protest process.

COMMENT

Do not expect the ARB to change things that are a matter of law.  For example, if you strongly believe that the 10% cap rule should be reduced, you must work through organizations like CLOUT to change the law.

Tom Bazan is a force of nature when it comes to fighting the good fight on taxpayer issues, and offers these insightful comments:

I looked at what Edd has made available, and it should be helpful to most folks trying to argue in front of the ARB. I wish you well. I am a long-time broker, state certified appraiser, and hold a B.S. degree majoring in real estate, and have annually protested the HCAD value nearly every year. It seems that half of the time I have failed to get any significant reduction, outside of filing in the Civil County Court-at-law.

The ARB typically holds the line, and falls back on the excuse that they rely on the HCAD appriser’s testimony. It does not matter that the HCAD person likely never has seen your home. As Rube Goldberg would say “no matter how thin you slice it, it’s still baloney!”

First verify all the physical data. Many times HCAD will pick up the square footage from a home builder’s floor plan. Not every house, especially 2-story custom homes, have the same square footage as what HCAD has recorded. A difference of a mere 100 square feet of dwelling, at $100.00 per sq.ft., with an overal tax rate of $3.00/$100.00 of valuation calculates to $300.00 annually in taxes.

Be selective as to the repairs you list. If it is deferred maintenance, you will get no sympathy. If you have a cracked slab, flood every year, or documented damage from wood-destroying insects, that is worthy of consideration.

It is important to have several copies of all documents, photographic exhibits, estimates from contractors (ie, foundation repair bids), etc.

Do your homework. You have a right to ask for the sale comparables that the HCAD will or did use in your neighborhood to determine values.

Go look at each one. Take photos. There is no law preventing you from calling the homeowner and asking them questions about the transaction. Did it sell below the list price? Ask them if they think they paid too much? Were there incentives? Did the seller throw in personal propertry, pay part of the closing costs, etc. Did the buyer pay extra because the spouse had to but that house no matter what the cost?

What about buyer’s remorse? After they bought it, what deficiencies were discovered that would have affected the price? Those rail road tracks were quaint, but the noise (nuisance) from twenty-trains passing each day gets old quick. They may not have paid what they paid had they realized. You need to make notes of the conversations from each homeowner.

You will be under oath, so do not mislead because they may follow to confim what you have testified to.

Disclaimer, Again: The information and suggestions presented here may be useful and relevant information for protesting taxes in Harris County.  They may be applicable in other Appraisal Districts as well, but local procedure may differ. Tips provided by John Rivard are based on his serving four years as a member of the Harris County Appraisal Review Board, 1998-2001.  They do not necessarily represent the views of the Appraisal Review Board or The Harris County Appraisal District. Tips provided by Tom Bazan are based on his long-term reputation for pro-taxpayer activism. The writers, CLOUT, LST and KSEV make no warranties or claims regarding the accuracy or usefulness of the information presented below. Use of this information is no substitute for professional or legal advice, or for your own common sense.