Landlords' Roadmap: How to Protest Property Taxes Effectively

Learn the steps for a property tax protest to challenge your rental unit's appraisal and potentially reduce your tax burden.

By
Gemma Smith
|
Last Updated
November 28, 2023
Landlords' Roadmap: How to Protest Property Taxes Effectively

Imagine overpaying thousands on your property taxes due to a simple oversight in valuation.

As a landlord, managing property taxes is essential for profitability. However, many are unaware that inaccuracies in property tax valuations can silently drain their pockets.

What if you could challenge these overvalued assessments? By mastering the art of property tax protests, not only can you potentially reduce your tax burden, but also ensure you maximize the return on your investment.

Dive into this guide to discover the steps for a successful property tax protest and understand how to safeguard your valuable investments.

Key takeaways- property tax protest

Understanding property taxes and valuations

Property valuations significantly determine the amount of property taxes you are liable to pay each year. When the local appraisal district values your property, the appraised value is used to calculate your taxes. If you believe it is overvalued and the amount you are being charged is too high, you have the right to protest.

It's important to note that property tax rates and regulations vary by state. According to data from WalletHub, New Jersey and Illinois are among the states with the highest property tax rates in the United States. New Jersey has the highest average effective property tax rate of 2.47%, while Illinois was close behind at 2.23%. On the other hand, Hawaii and Alabama have the lowest effective real estate tax rates, at 0.29% and 0.41% respectively. 

As a real estate investor, variations in property tax rates can significantly impact your rental property's profitability, especially if you have fixed rental income or limited resources to cover unexpected expenses.

How will you know when your property tax has increased?

You will know your property tax has increased when you receive your annual property tax assessment notice from your local tax assessor's office. This notice provides details about your property's assessed value for the current year and the corresponding tax amount.

Any changes, including increases from the previous year, will be highlighted or itemized in this document. It's essential to review this notice carefully each year, as it provides information on deadlines and procedures if you wish to challenge or appeal the assessment.

Additionally, many local tax assessor offices have online portals where property owners can check their tax records and see historical data, offering another way to monitor changes.

When to consider a property tax protest

A guide on when to consider a property tax protest

Disagreements with property tax appraisals may arise for a variety of reasons, such as:

  • Inaccurate property descriptions: For example, discrepancies in square footage or room count.
  • Outdated or incorrect data: The appraisal district may have relied on unsuitable information to determine your property's market value.
  • Inconsistency with neighboring properties: The appraised value might not align with similar properties nearby.
  • Impact of external factors: Events like natural disasters or shifts in the local real estate market could necessitate a reevaluation.

It is important to challenge the appraisal if you have concerns about its accuracy. By scrutinizing the appraised value, you can identify errors or inconsistencies that may have led to an inflated property value and higher property taxes.

Pursuing a property tax protest allows you to obtain a more precise valuation, with the goal of reducing your tax liability. 

How to prepare for a property tax protest

When challenging a property tax appraisal, it's imperative to arm yourself with robust evidence. Detailed and relevant data points not only lend credibility to your protest but also enhance its persuasiveness. By building a comprehensive case, you significantly boost your chances of obtaining a favorable and accurate property valuation, leading to reduced tax obligations.

For those dealing with multifamily properties, the depth of evidence becomes even more vital. Such properties have unique factors to consider, like potential income generated from various units, which can play a pivotal role in influencing the appraisal's outcome.

To prepare a persuasive argument, it is essential to gather specific data beforehand. Here are some key data points to collect:

  • Current assessed value: Obtain your property's most recent appraised value as determined by the appraisal district. Compare this value to similar properties, highlighting any significant discrepancies.
  • Comparable property values: Research and collect data on the assessed values of properties in your area that are similar to yours. Analyze recent sale prices of comparable properties to demonstrate how your assessed property value may not correspond with current market conditions.
  • Recent sale prices: Gather information on the prices of comparable properties recently sold in your neighborhood.
  • Market trends: Keep abreast of the local real estate market's current trends, as they can influence property values. Use local market trends to show how your particular property value may have been affected by broader shifts in the real estate market.‍
  • Property improvements or damages: Record any recent improvements or damages to your property that may impact its value, then present evidence of these changes to support your argument for a revised valuation.

What forms do I need to protest the appraised value?

To effectively protest your property tax appraisal, you must identify the appropriate paperwork for your local appraisal district. The specific forms you need will vary based on your district's requirements, but generally, two common forms are typically used in a property tax protest: the Notice of Protest and the Request for Informal Review form.

The Notice of Protest form is an official document that notifies the appraisal district of your intention to protest the assessed value of your property. Meanwhile, the Request for Informal Review form is a less formal document that requests an informal review of your property's assessed value before a formal hearing is scheduled.

To ensure you complete the correct form and avoid errors, carefully read the instructions and guidelines provided by your local appraisal district. These guidelines will outline the specific requirements for each form and may also specify additional documents or evidence you must submit along with your protest.

Once you have filed your Notice of Protest, you need to be aware of the timeline of events that will follow. First, the appraisal district will schedule an informal hearing to discuss your property's assessed value. This hearing typically occurs within 30 to 60 days of filing your protest.

Can I appoint someone to represent my property tax protest case?

Yes, you can appoint someone to represent you for your protest hearing. This representative can be an attorney, a property tax consultant, or any other qualified individual authorized to practice before the appraisal district or Appraisal Review Board (ARB).

Hiring a representative can be beneficial if you feel unsure about the process or lack the time or resources to prepare a compelling case on your own. A representative can bring valuable experience and expertise to the table, helping you navigate the process and build a strong case for a revised property valuation.

However, it's important to note that hiring a representative can also be costly, and their fees may outweigh any potential savings in property taxes. Additionally, you should exercise caution when choosing a representative, as not all consultants or attorneys may have your best interests in mind.

Ultimately, the decision to hire a representative is a personal one that depends on your circumstances and preferences. Weighing the pros and cons carefully will help you choose a trustworthy, experienced representative who can deliver results.

Attending an informal hearing at an appraisal district office

The purpose of the informal hearing is to provide an opportunity for property owners to present their case for a revised property valuation. This meeting is typically less formal than a formal hearing and can be a chance for property owners to resolve the issue without the need for further appeals.

At the informal hearing, you will have the opportunity to meet with an appraiser from the appraisal district to discuss your property's assessed value. You can present your collected evidence and argue your case for why you believe the assessed value is too high. The appraiser may also provide additional information on how they arrived at the assessed value and may be willing to adjust it if they find your arguments persuasive.

During the informal hearing, be sure to remain professional and respectful. State your case clearly and concisely, and avoid becoming defensive or confrontational. Listen carefully to the appraiser's responses, and be prepared to offer counter-arguments or additional evidence to support your case.

After the hearing, the appraiser will review the evidence presented and may adjust the assessed value if they find your arguments persuasive. If an agreement is reached, a written agreement will be signed, and the case will be closed. If you cannot reach a satisfactory agreement, you will move on to a formal hearing before an ARB, typically within 45 to 90 days of the informal hearing.

What is an appraisal review board (ARB)?

The ARB is a group of citizens appointed by the local government to hear property tax protests. An example is the Travis Central Appraisal District in Texas. The ARB's primary function is to serve as an independent and impartial third party in the appeals process. The board is responsible for reviewing any evidence presented by the property owner/ landlord and the appraisal district and finalizing the property's assessed value. The ARB's decision is legally binding and can only be challenged through further legal action.

During the ARB hearing, the property owner and the appraisal district can present evidence supporting their respective positions. The evidence presented will be reviewed, and the property's assessed value will be determined. If the ARB decides in favor of the property owner, the subject property' assessed value will be adjusted accordingly, resulting in lower property taxes. If the ARB upholds the appraisal district's assessment, the property owner's tax liability will remain unchanged.

When will I find out about the ARB's decision?

After attending the ARB hearing, the board will deliberate and decide your property's assessed value. The timeline for the decision varies by jurisdiction, but you can typically expect to receive a written notice of appraised value within a few weeks of the hearing.

Once you receive the decision, carefully review it to determine if you are satisfied with the outcome. If the ARB has lowered your assessed property value, your taxes will be reduced accordingly. However, if the ARB upholds the initial assessed value or only makes a slight reduction in appraisal value, you may disagree with the decision and want to consider further action.

If you do not agree with the final decision, you can file an appeal through either district court or arbitration. The process for each option differs, and understanding the pros and cons of each before proceeding is recommended.

Filing an appeal can potentially be a complex process and may require legal expertise. Consider consulting with a qualified attorney or property tax professional to assist you. Remember, the burden of proof still falls on you to demonstrate why your assessed property value should be revised, so be prepared to provide evidence to support your case.

Appealing property taxes through district court or arbitration

Suppose you disagree with the decision made by the Appraisal Review Board (ARB) and feel that your property's assessed value is still inaccurate. In that case, you may consider further appeals through the district court or arbitration. This decision should be made after careful consideration of the cost and time involved and the strength of your case.

It's important to note that the district court or arbitration should be viewed as a last resort. The process can be lengthy, and the cost of legal representation and court fees can quickly add up. However, pursuing further appeals may be worth the investment if you feel the property value has been greatly overestimated.

Moving forward with confidence: Mastering the protest process

With the variations in property tax rates and regulations across states, it's important to stay informed about the property tax landscape in your area.

To successfully protest your property tax appraisal, gather specific data such as your property's assessed and fair market value amount, comparable property values, recent sale prices, market trends, and property improvements or damages. These data points will help you create a well-researched and compelling case, increasing your chances of achieving a more accurate property valuation and lowering your property taxes.

Remember that you have the right to challenge the assessed value if you have concerns about its accuracy. By scrutinizing the appraisal, you can identify errors or inconsistencies that may have led to an inflated property value and higher taxes. And if you feel you need more time or resources to prepare a compelling case on your own, you can hire a representative to help you navigate the process.

Protesting your taxes can be complex, but being proactive and well-informed can reduce your tax burden and maximize your real estate investment.

Protesting property taxes FAQs

How do I successfully protest my property taxes in Texas?

Protesting your property taxes in Texas involves understanding your tax assessment, filing a protest by the May 15 deadline or within 30 days of receiving your assessment notice, and gathering compelling evidence. Evidence can include comparable property values, recent appraisals, and photographs highlighting any issues affecting your property's value. It's also beneficial to familiarize yourself with the appeals process and possibly consult a professional for guidance.

Which method of protesting taxes was most successful why?

The most successful method of protesting property taxes often involves presenting a well-prepared case with solid evidence, typically during an informal or formal review with the appraisal district. Here's why this method tends to be most effective:

  1. Solid evidence: The key to a successful tax protest lies in the evidence presented. This includes comparable property values, recent appraisals, and documentation of any issues (like repairs needed or discrepancies in property description) that might lower your property's value.
  2. Informal review: Starting with an informal review allows for a more relaxed setting to negotiate with the appraiser. Many disputes are resolved at this stage without needing a formal hearing.
  3. Formal appraisal review board (ARB) Hearing: If the informal review doesn't yield satisfactory results, the next step is a formal hearing before the ARB. Here, presenting organized and convincing evidence is crucial. Being well-prepared and professional can significantly impact the outcome.
  4. Professional assistance: In some cases, hiring a tax agent or attorney who specializes in property tax protests can greatly increase the chances of success, especially for complex cases or high-value properties.
  5. Understanding of local market conditions: Being informed about your local real estate market and how it impacts property values can provide a strong foundation for your argument.

Efficiently managing these aspects of property investment and understanding the nuances of tax protests can significantly impact your real estate success.

The information provided in this article is intended for informational purposes only and should not be considered legal, financial, or professional advice. Readers are encouraged to seek advice from qualified professionals before making any decisions based on the content of this article. The author and publisher make no representations or warranties with respect to the accuracy or completeness of the contents of this article and specifically disclaim all warranties, including without limitation any implied warranties of fitness for a particular purpose.

Gemma Smith

With 7 years in property management, Gemma serves as a key content strategist at Azibo.com. While excelling in writing, editing, and SEO, she also enhances Azibo's social media presence. Passionately, Gemma educates others to make informed real estate investment decisions in the ever-changing market.

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