Property Tax |

How Property is Valued

Each county appraisal district determines the value of all taxable property within the county boundaries. Tax Code Section 25.18 requires appraisal districts to reappraise all property in its jurisdiction at least once every three years. Tax Code Section 23.01 requires that appraisal districts comply with the Uniform Standards of Professional Appraisal Practice if mass appraisal is used and that the same appraisal methods and techniques be used in appraising the same or similar kinds of property. Individual characteristics that affect the property’s market value must be evaluated in determining the property’s market value.

Before appraisals begin, the appraisal district compiles a list of taxable property. The list contains a description and the name and address of the owner for each property. In a mass appraisal, the appraisal district then classifies properties according to a variety of factors, such as size, use and construction type. Using data from recent property sales, the appraisal district appraises the value of typical properties in each class. Taking into account differences such as age or location, the appraisal district uses typical property values to appraise all the properties in each class.

3 common approaches that the appraisal district may use in appraising property are the sales comparison (market) approach, the income approach and the cost approach.

The market approach to value is based on sales prices of similar properties. It compares the property being appraised to similar properties that have recently sold and then adjusts the comparable properties differences between them and the property being appraised.

The income approach is based on income and expense data and is used to determine the present worth of future benefits. It seeks to determine what an investor would pay now for a future revenue stream anticipated to be received from the property.

The cost approach is based on what it would it cost to replace the building (improvement) with one of equal utility. Depreciation is applied and the estimate is added to the land value.

Problems:

Sales tax has been declining and corporate loopholes continues

Loopholes in Texas tax and expenditure limits to avoid paying taxes

Tax increment financing is a way for companies to avoid paying taxes

Texas is a non disclosure state

Texas does not have a real estate transfer tax

Commercial real estate owners have the resources to use legal loopholes in the appraisal system

Reducing the roll back rate for local Texas governments from 8% to 4% is not property tax reform

Solutions:

Expand medicaid

Amend the the Texas constitution to allow the counties to collect attorney’s fees if they win in court to discourage frivolous appeals

Require real estate sales price to be public

Establishing a state-financed legal defense fund for counties facing appraisal lawsuits

Create a state public bank

Reform TIRZ

Create a roperty tax circuit breaker and do a pilot study with 2 to 3 counties

Amend the Texas Constitution (A3) from median value to market value

Amend the Texas constitution to close the corporate loopholes for golf courses

Amend the Texas constitution (a-1) to lower the market value to $500,000 for homeowners that protest appraisals

Texas Constitution
Code – Tax Code
Chapter – 23 Appraisal Methods and Procedures
Section – 23.01
Section – 23.81 Subchapter F. Appraisal of Recreational, Park and Scenic Land
Chapter – 25 Local Appraisal
Section – 25.18 Periodic Appraisal
Chapter – 26 Assessment
Section – 26.04 Submission of Roll to Governing Body; Effective and Rollback Tax Rates
Chapter – 42 Judicial Review
Section 42.26 Remedy for Unequal Appraisal
Chapter – 41 Local Review
Section – 41.43 Protest of Determination of Value or Inequality of Appraisal

Code – Government Code
Chapter – 403 Comptroller of Public Accounts
Section – 403.302 Determination of School District Property Values

Code – Texas Constitution
Article – 8 Taxation and Revenue
Section – 1 Equality and Uniformity; Tax in Proportion to Value: Income Tax; Exemption of Certain Tangible Personal Property from Ad Valorem Taxation

Code – Tax Code
Chapter – 42 Judicial Review
Chapter – 42.26 Remedy for Unequal Appraisal

Slate – These Graphs Explain Why California’s Property-Tax Regime Is the Worst

Statesman – PolitiFact: Texas property taxes high, but burden varies

Statesman – Commentary: Texas Constitution is not a loophole

Statesman – Appeals shift tax burden

Statesman – Businesses are winning in court or through settlements to get their tax valuations lowered

Statesman – Property tax bill with far-reaching consequences had hidden beginning

Texas Tribune – Sales Price Disclosure Debate May Take a Turn in Texas

Texas Tribune – Cable and Satellite Providers Square Off Over Tax Break

Texas Tribune – Property Tax Relief Comes With Big Cost to State

Texas Tribune – Bettencourt Hopes to Slow Property Tax Growth

Texas Tribune – Lawmakers Want Property Tax Cut That Folks Notice