The Texas Tax Code requires properties to receive an appraised value each year. By law, your local appraisal district must assess the value of your home at its market value as of January 1. Your home’s appraised value is then used when calculating your property tax bills.
However, accurately calculating fair market value requires time and information that the appraisal district just doesn’t have. This means that the government’s “appraisal value” can be too high and doesn’t align with your home’s actual fair market value.
Fair market value (FMV) is the price a piece of real estate would receive if sold on the open market. Because property does not sell instantly like stock, FMV allows for a reasonable time frame to shop the property to various sellers. Calculating FMV also requires access to information about the condition and features of the property.
FMV is typically tied to significant indicators of home value, such as:
However, your home’s FMV cannot be calculated solely based on these attributes. For example, if you have a damp, moldy basement, a seller will pay less for your house than for a comparable property.
The appraised value of your home is calculated by a professional, independent third party. An appraisal uses details about your house (such as square footage, bedrooms, and bathrooms) as a starting point. The appraiser will also visit the property in person and walk through to learn more about its condition. Then, the appraiser will look at “comps,” which are the sales prices for similar homes in nearby neighborhoods.
In real estate, appraisals are done for various reasons, including giving realtors a price point. Banks and lenders also use appraised values when giving home mortgages or refinance loans. Usually, you cannot receive a mortgage that exceeds your home’s appraised value.
Although the county entity responsible for determining home value is known as the appraisal district, try not to let the name confuse you.
Your local government is not involved in home appraisals. Because of the sheer number of properties that need to be assessed for property tax purposes, local appraisal districts simply don’t have the time or resources to actually appraise each home in the state. Instead, each county mass-assesses the values of similar homes, only looking at public records for details like square footage and the home’s age.
Therefore, when valuing property, appraisal districts often overlook characteristics that would impact the FMV, such as leaky roofs and foundational issues. Additionally, if the public record regarding your house is incorrect (for example, it overstates your square footage), your assessed value will be wrongly inflated.
If your home is over-valued by the appraisal district, you could end up paying more taxes than you should owe. Luckily, as a Texas homeowner, you can protest the property tax assessment of your home’s value. And if you are successful, this will reduce your property tax bill.
Once you receive your annual assessment notice from the taxing district, you can file a protest form with your local county. Anyone protesting their property tax assessment receives a hearing before a local appraisal review board (ARB). The local citizens on the ARB have the power to reduce your home’s assessed values and thereby lower your property taxes.
There’s no need to try filing a property tax protest or attending an ARB hearing on your own when the experienced team at Watchtower Protest can handle it for you. We have years of experience challenging property values with evidence-based arguments before ARBs. And as a homeowner, you can sign up today without paying a cent until we get your property taxes reduced!
Learn about the various property tax exemptions for disabled persons and veterans in Texas, plus other ways to lower your tax bills.