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
  • Tax increment financing is a way for companies to avoid paying taxes
  • Commercial real estate owners have the resources to use legal loopholes in the appraisal system

Solutions:

  • Require real estate sales price to be public
  • Establishing a state-financed legal defense fund for counties facing appraisal lawsuits
  • 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 (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

Texas Tribune – Loser-Pays Bill Clears Texas House

Austin Business Journal – Texans to fight to keep sales prices of land, homes and offices private

Missoula Realtors lukewarm on proposed real estate sale price disclosure bill

Dallas News – Dallas Country Club sues appraisal district for eighth time

Dallas News – Six lawsuits from Dallas Country Club shaved $15 million off property values

Dallas News – Editorial: Sales price disclosure needed for transparent taxes

Dallas News – For ideology and industry, Texas Legislature passes lots of little tax breaks, and they add up

Dallas News – Should Lowe’s ‘dark store’ strategy in Texas concern D-FW taxpayers?

Dallas News – A Taxing Problem: Dallas property taxes squeeze middle class while wealthy, businesses reap advantages

Dallas News – Tax law leads to towering savings for big building owners

Dallas News – Level Texas’ property tax playing field

My San Antonio – Mandatory Real Estate Sales Price Disclosure

My San Antonio – Property tax loophole could drive down values, appraiser says

My San Antonio – Property tax fight misses the point

My San Antonio – Patrick’s Bexar property tax analysis is faulty

My San Antonio – 2016 Bexar County property value is up $13 billion over year before, real estate values up 7.5%

NPR – Reporter’s Notebook: How to Get Information in a Non-Disclosure State

NPR – Teed Up: Slicing Texas Tax Breaks

Billings Gazette – Director says real estate sales prices should be public

Texas Monthly – The Taxing Issue of Rollbacks

CPPP – Have Property Taxes Gone Up, Really?

CBPP – Without A State Income Tax, Other Taxes Are Higher

CBPP – The Problems with Property Tax Revenue Caps

CPPP – Circuit breakers: The Best Way to Control Property Taxes

New York Times – State by State Property Tax Rates

New York Times – The Joys of No Income Tax, the Agonies of Other Kinds

Houston Independent School District Tax Rate

Texas tax code loopholes State tax exemptions need to be reviewed.

Harris County keeps property tax rate even but bills may rise

Lincoln Institute of Land Policy – 50 State Property Tax Comparison Study

Caller Times – Tax code amendment costs schools millions

Beaumont Enterprise – Valero, BASF, Total protest in ‘ongoing’ property tax battle

Texas Public Radio – The Source: Constitutional Right Or Abused Loophole?

Houston Chronicle – Bill would require super majority to pass local tax hikes

Houston Chronicle – Another story on the huge inequities of our property tax system

Houston Chronicle – Marathon settles suit with Galveston County appraisal district

Houston Chronicle – 7 things to know about a costly tax ‘loophole’

Houston Chronicle – Texas property taxes among the nation’s highest

Houston Chronicle – County to drop challenge of HCAD’s methods

Houston Chronicle – Some tax breaks have become par for the course

Houston Chronicle – Texas tax code loopholes

Houston Chronicle – Tort deform: House Bill 274 further stacks the legal deck in favor of big-money defendants

Houston Chronicle – H-E-B, Walgreens file suit against Jefferson County Appraisal District

Texas Municipal League – Proposed “Tax Cuts” and What They Might Mean for Cities

Ballotpedia – Texas Homestead Exemption for School District Property Taxes Amendment, Proposition 1 (2015)

Texas tax myths shattered: It’s actually one of highest tax rates in U.S. — unless you’re in the top 1 percent

League of Women Voters Texas – Financing State Government; The Budget and Taxes

Texas Observer – How an obscure amendment to the state’s property tax code helps corporations leave counties—and citizens—stretched thin

Texas Observer – Instead of Tax Breaks for Yacht Owners, How About Closing Corporate Loopholes?

Texas Observer – The owner of Texas’ biggest fleet of coal-fired power plants is trying to wiggle out of paying its property taxes

Waco Tribune – Local government funds at stake as Riesel coal plant sues over value

Houston Press – Texas Is Losing Out on Millions of Dollars Thanks to Its Defective Property-Tax System

Houston Press – Shakedown: The HCAD Appraisal Game

Longview New Journal – Titus power plant Luminant in suit over tax appraisals

Public Citizen – Expose Corporations That Are Rigging the Justice System Against Consumers

Wall Street Journal – Why Data Centers Collect Big Tax Breaks

Bloomberg – Texas Cities Are Worried Republicans Pushed Tax Cuts Too Far

Texas Monthly – What Happened to the Property Tax Cut?

Governing – Big-Box Stores Battle Local Governments Over Property Taxes

News Week – This California Property Tax Loophole Must Be Fixed

Progress Texas – My Tax Dollars Pay for WHAT?!?!

Texas Association of Counties – Heavy Equipment Tax Loophole Being Exploited

Dallas Observer – Dallas Country Club Sues Central Appraisal District Over “Unfair” $15-Million Valuation

Dallas Observer – The Dallas Country Club is Now Worth $36 Million, DCAD Says. Cue the Lawsuit in 3 … 2 …

Community Impact Newspaper – Katy area property values continue to rise at an average of 3-8 percent

The Atlantic – The Folly of State Level Tax Cuts

Star Telegram – Tarrant property owners: Five things to know about filing a protest

New York Times – Texas May Consider a Bill Forcing Losers in a Suit to Pay Opponents’ Legal Fees

San Antonio Current – Big Box Chain Brings “Dark Store” Tax Dodge to San Antonio

San Antonio Current – Valero Court Case Could Mean Higher Property Taxes for San Antonio Homeowners

The Anniston Star – Calhoun County court consolidates Lowe’s property tax cases