Each year, you receive your Texas property tax bills and are reminded just how much of your annual budget goes towards your home's taxes. But did you know how those taxes are calculated and what impact computer assisted mass appraisal systems (CAMAs) have on how much you pay?
Though every Texas property is supposed to be assessed annually, the sheer number of taxable homes makes individual, detailed appraisals inefficient or impossible. Instead, your local county appraisal district will likely use CAMAs and their algorithms to estimate your home’s value.
When the software and modeling make mistakes, or simply get your home’s value wrong, you could end up paying more than your fair share on your Texas property taxes.
Texas law requires that all land be appraised for taxes based on its market value on January 1 of every year. Each Texas county has a local appraisal district responsible for setting assessments of all property in the county. Your home’s assessed value is supposed to match its market value.
To determine market value, your local appraisal district will likely use mass appraisal techniques - a process to simultaneously value a group of supposedly similar properties. It is impractical for most districts to offer a detailed appraisal of every home in their jurisdiction. CAMAs and other mass appraisal techniques can help the appraisal district efficiently estimate the market value of all taxable properties.
Mass appraisal techniques use publicly available data such as your home's lot size and square footage. CAMAs take the publicly available data used for mass appraisal and apply standardized modeling and statistical testing to calculate the value of a group of homes.
When a CAMA is used to calculate mass appraisal values, substantial amounts of data are fed into the model. The goal is for the statistical model to be thorough enough for the value outputs to be adequately accurate and justifiable. The computer analyzes geographic data to develop a predictive market value model, including previous assessed values, neighborhood and market characteristics, and recent sales prices.
Local real estate sales are a vital factor for CAMAs, with sales trends and land-value baselines being essential data points. Additionally, depreciation and the current cost of building a new, replacement structure on the land factor into the calculation. Because land value is lower than market value, the cost of improving land through the significant amounts of material and labor required for building a home must factor into the model.
Finally, property characteristics are evaluated by CAMAs. These include what features add (or subtract) value based on the local market. Once the CAMA model is developed, your home's individual characteristics, such as the number of bedrooms or bathrooms, are applied to determine your home's value more accurately.
Because CAMAs apply statistical modeling to a group of properties, they generate a curve of values. By definition, half of the properties will be over-valued relative to the market price, while half will be under-valued. The curve smooths the differences, so many homes receive an appraisal value that relatively approximates its market value.
However, computer models make mistakes. For example, if the data fed into the mass appraisal model is incorrect, your home’s appraisal could be impacted. Imagine you have a 2,500-square-foot house with 4 bedrooms. If an error in public records causes the CAMA to evaluate your home based on 3,000 square feet and 5 bedrooms, your appraisal will be wrongly inflated.
Luckily, Texas law grants every property owner the right to protest their home’s appraisal value. Through a Texas property tax protest, you can challenge your home's appraisal value and potentially lower your tax bills.
Filing a protest entitles you to a hearing before your local Appraisal Review Board (ARB). There, you can present evidence that the value determined by a CAMA is incorrect and that your home’s market value is lower. A qualified representative can help you collect evidence that the CAMA over-valued your home.
Through checking public records and applying our own valuation models, Watchtower Protest helps Texas homeowners gather compelling evidence in anticipation of their ARB hearing. Our experienced team of property tax professionals will represent you at every step of the process, and we only get paid if your property tax bills are lowered.
Plus, signing up for Watchtower’s services is as simple as filling out a quick form on our website. So, add Watchtower to your team before you file a protest against an incorrect home appraisal value.
Property tax in Montgomery County - a property tax consultant can help you manage your tax obligations, exemptions, deductions, and how to challenge your assessment.