The Burton Law Firm, P.C. has over 10 years of experience in this area of the law. If you have any
further questions about this subject, please call us at 713-222-6262; or David Torok at david@burton-lawfirm.com.
General Law - Ad Valorem/Property Taxes
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Who is an ad litem?
An attorney appointed by a court, at the request of a taxing entity's counsel when an apparent owner
of real property that is made the basis of delinquent taxes cannot be located, has gone out of business
or is deceased.
- Who pays for the ad litem's fees?
The fees are taxed as a cost in any judgment assessed in the delinquent tax judgment.
- What is an ad valorem tax?
A tax based upon value.
- What is an administrative appeal?
Collectively this refers to the informal hearing and appraisal review board (ARB) hearing during the
property tax appeal process. The administrative appeals must be exhausted before a property owner
can file a judicial appeal (lawsuit in state district court).
- What is appraisal?
An opinion of value, typically provided by an independent third party. Texas appraisal districts
develop an opinion of value for all real estate, business personal property, and minerals within the
county at least every three years.
- What is an appraisal review board (ARB)?
The appraisal review board conducts property tax protest hearings for appeals not resolved at the
informal hearing. In most counties, ARB hearings are conducted by three-member panels to prepare
a recommendation for the full appraisal review board. The panel recommendations are formally
affirmed at periodic meetings of a quorum of the appraisal review board. The appraisal review board
is technically independent of the appraisal district. However, since the board of directors of the
appraisal district hires appraisal review board members, the appraisal district pays and supervises
ARB members, and an attorney controlled by the appraisal district guides the appraisal review board
on legal matters, the appraisal review board is not completely independent of the appraisal district.
- What is appraised value?
The value upon which property taxes are calculated. Both real property and business personal
property can be partially or totally exempt. The homestead exemption is an example of a partial
exemption for real property.
- Who is an appraiser?
One who values property. Appraisers value real estate, business personal property, art, jewelry,
mineral interests and other types of property.
- What are assessment comparables?
These are assessed values for properties which are comparable to the subject property. Factors that
make a property comparable include property type, location, size, age and condition.
- What is business personal property?
Tangible personal property used for the production of income. Business personal property is taxable
at the same tax rate as real property in Texas. Examples of business personal property include
inventory, office equipment, office furniture, heavy equipment, trucks and cars.
- What is a central appraisal district (CAD)?
An organization that compiles an inventory of property within the county and values it periodically
using mass appraisal. Types of property listed include real property, business personal property and
minerals. The central appraisal district is charged with maintaining detailed information for the
properties and administering exemptions. Most appraisal districts do not send tax bills; their
activities are limited to determining market values and appraised values which are submitted to tax
entities who prepare and mail tax bills. Each Texas county has an appraisal district or the activity
is outsourced to another appraisal district.
- Who is the chief appraiser?
Chief administrative officer of a central appraisal district.
- What are comparables?
Information on properties which are similar with regard to factors such as property type, location,
size, year built and condition. For property tax matters, comparables are used both for the sales
comparison approach and unequal appraisal.
- What is the cost approach?
One of the three generally accepted approaches to valuing real estate. Preparing a cost approach for
real estate involves estimating the replacement cost of the property, subtracting an allowance for all
types of depreciation and adding the market value of the land. The sum of the depreciated
replacement cost and land value is the indication of market value via the cost approach.
- Can one pay current taxes instead of delinquent taxes?
Yes.
- What is a deferral?
A postponement of the payment of taxes. It does not cancel them. It applies to a homeowner age
65 or over, or disabled, so long as helshe owns the subject property.
- Is it possible that property can be sold for delinquent taxes?
Yes. A lawsuit for tax lien foreclosure can be filed and a judgment subsequently granted by the
court. The attorneys, with the approval of the local tax office, can then proceed with tax sale
procedures.
- When can property can be bought for delinquent taxes?
Only after a lawsuit for tax lien foreclosure has been filed, and later a judgment has been granted by
the court to sell the property. You will need to contact the law firm that administers delinquent tax
sales on behalf of the specific taxing entity conducting the foreclosure.
- Can I make monthly installments on delinquent taxes?
Yes. You can make monthly payments through June but you will have to pay penalty and interest
starting February 1. If you still have a balance at the end of June, you can enter into an installment
agreement at that time to pay any remaining balance plus penalty and interest over the next six
months. While you will not avoid paying penalty and interest under this plan, you will avoid
additional legal fees on the outstanding balance by signing the installment agreement in June and
making the payments on time.
- Why I am getting a delinquent tax notice on property I just purchased?
The tax laws require the delinquent tax bill be mailed to the current owner of real estate, rather than
to the previous owner. Because a tax lien exists against that parcel, it is in the current owner's best
interest to have knowledge of that lien. If a lawsuit were filed to foreclose the lien, the current owner
(not the previous owner) risks losing the property to foreclosure; although both might be sued for
the delinquent taxes.
- What are exemptions?
Special tax benefits established by the legislature and administered by the central appraisal district.
These affect the amount of the value taxed; not the setting the setting of the value. The most
common exemptions are for homestead status, veterans, homeowners over 65 and/or handicapped
persons.
- What is a homestead cap?
A limitation on the increase in assessed value but not market value for homesteads. This limitation
applies only to homesteads and not to second residences, homes owned for investment or any other
type of real property, personal property or minerals. The limitation is 10% per year, times the number
of years as the property was last reappraised, plus the market value of improvements added since the
property was last appraised. Improvements do not include maintenance.
- What is the effect of a homestead exemption?
A partial exemption of property taxes in Texas for owners of a residence. In many jurisdictions, the
benefit of a homestead exemption is property taxes are reduced by approximately 20%. However,
homestead exemptions vary from tax entity to tax entity. Homeowners must apply for a homestead
exemption. It is not necessary to apply annually once the homestead exemption has been approved.
However, if the chief appraiser requests a new application, the homeowner must respond to maintain
their homestead exemption.
- When do I qualify for a homestead exemption?
You are entitled to a homestead exemption if you own your home on January 1 and it is your primary
residence.
- What is meant by income analysis?
The process of performing the income approach or a summary of the research and calculations
performed during the income approach to value real estate.
- What is meant by income approach?
One of the three generally accepted approaches to valuing real estate. The income approach can be
performed using either a direct capitalization approach or a discounted cash flow analysis. The direct
capitalization approach is most frequently applied during property tax appeals for income properties
in Texas. Income properties would include apartments, office buildings, retail centers, and industrial
properties which are totally or partially leased to third parties to produce income. Steps in the income
approach include estimating market rent, market vacancy, other income, operating expenses and a
capitalization rate.
- What is an income statement?
A summary of the revenues, operating expenses, depreciation, interest and net operating income for
a business or parcel of real estate.
- What is an informal hearing?
The first step of the property tax protest process. The administrative hearings collectively include
the informal hearing and an appraisal review board hearing. During the informal hearing, the
property owner or property tax consultant meets with an appraiser employed by the central appraisal
district. The owner/consultant and the appraiser trade information and attempt to negotiate a
settlement. If the informal hearing results in an agreement, there is no appraisal review board hearing
for the property and the assessed value is final for the year. Some counties will send the owner or
his consultant notice of a formal hearing and invite the owner/consultant to come in first for an
informal hearing.
- What is meant by intangible personal property?
Property which is neither real property nor tangible personal property. Intangible personal property
cannot be seen, felt, weighed, or measured.
- What is a judicial appeal?
Property owners may file a judicial appeal, or a lawsuit in state district court, if they are not satisfied
with the result obtained at the appraisal review board hearing.
- What is market value?
The amount of money, in US dollars, which could be obtained for property exposed to the market
for a reasonable period of time, where both parties are knowledgeable regarding all possible uses and
defects with the property and neither party is under duress to consummate a transaction.
- How is a mass apprisal done?
The process usually involves compiling data regarding the physical characteristics of the property
and market data such as rental rates, vacancy rates, expense rates, other income, capitalization rates,
cost data and comparable sales data. Valuations are calculated using data for each subject property
with the market data. Statistical processes including regression analysis are performed to develop
an estimate of value for each property. This is the process typically used by appraisal districts in
Texas to estimate the market value for real estate. It is used to value real estate when it is not
possible to perform an individual appraisal for each property.
- Am I responsible for penalties and interest if I never received the tax bill?
Generally, yes. As a property owner, it is your responsibility to make sure that you receive a bill and
that it is paid on time. The statements are mailed and the taxes are due at the same time each year.
If you have not received a bill by the middle of December, you should call and request that another
one be mailed to you. You are also able to call and get an amount due over the phone as early as
October or look up your account on the applicable website. It is not necessaly to have a statement
to make payment as long as you have your account number and know the correct amount
- What is personal property for tax purposes?
Property which is tangible yet is not real property. In Texas, the typical basis for differentiating
between real property and personal property is whether it is attached to the real property.
- How is personal property treated for tax purposes?
Personal property used for the production of income is taxable in Texas, at the same tax rate applied
to real estate. Personal property not used in the production of income is not taxable in Texas
- What is a property tax?
The tax calculated by multiplying the appraised value times the tax rate for a tax entity. The
appraised value may be different from the market value if the item is partially or totally exempt or
subject to a homestead cap.
- Is January 1, the property tax valuation date?
Yes, under most circumstances. This is meaningful if a property suffers either physical or economic
damage just before or just after January 1.
- What is a protest?
Property owner's right to appeal or object to an action of the chief appraiser, appraisal district or
appraisal review board that applies to or adversely affects the property owner. Most property tax
protests relate to the market value determined by the appraisal district. Other protests are filed
regarding unequal appraisal, exemptions, agricultural valuation and a variety of other issues.
Property owners can appeal annually on market value and unequal appraisal regardless of whether
the appraisal district changes the market value.
- What is the deadline to file a property tax protest?
May 3 1 is the typical deadline for filing a property tax appeal in Texas. However, the deadline is
technically the later of May 3 1 or 30 days after the appraisal district mails a notice of appraised
value. It is 30 days after the date the appraisal districts mails the notice of appraised value. It is not
30 days after the property owner receives the notice. If the property tax protest deadline falls upon
a holiday or weekend, the deadline is extended until the following workday. Property tax protests
are considered timely filed if mailed by first-class mail deposited in the mail on the deadline day.
- With whom do I file my protest?
With each local appraisal district that set an appraised value.
- How do I get a refund if the mortgage company paid my current taxes but 1 failed to claim
a homestead?
Apply for the exemption. If there is no name change on the account, the refund will be issued
automatically to the name and address on the tax roll. If there is a name change, our system will not
automatically issue a refund. You must apply for the refund. The refund will be issued to the actual
payer of the taxes.
- Is rent roll a summary of the tenants for a real estate property?
Yes. Most rent rolls include fields of data such as the name of the tenant, amount of rent, amount
of space, suite number, lease start date, lease termination date and other income if applicable.
- How is a sales comparison approach conducted?
The first step is to compile information on sales of comparable properties, sometimes referred to as
comps. The appraiser considers factors such as date of sale, property type, size, age, condition and
location when determining which comparable sales to utilize. After selecting comparable sales, the
appraiser makes adjustments for factors such as changes in market condition, conditions of sale (i.e.
distress sale), property rights conveyed, age, size, location and condition. The final step is to
determine an indication of value for the subject property using the adjusted values calculated for the
comparable sales. This is one of three general accepted ways of valuing real estate.
- What is the most common approach for determining the appraisal value?
The sales comparison is the most commonly used method. It is used for houses, owner-occupied
commercial properties and raw land. The income approach is generally used for income-producing
properties.
- What are comparable sales?
Data regarding sales of properties similar to the subject property. Fields of data compiled include
factors such as date of sale, property address, seller, buyer, sale price, square feet, year built,
condition and notes.
- What is the term used to describe a property that is valued by two appraisal districts?
Shares-CAD. This occurs when property lies within the boundaries of a tax entity which straddles
a county line and the tax entity has chosen the central appraisal district (CAD) outside of the subject
property county to value parcels within the tax entity. Appraisal districts are required to accept the
lowest assessed value established in any of the appraisal districts for a share-CAD property. The
lowest assessed value can be generated by its notice value, an informal hearing, an appraisal review
board hearing or a judicial appeal.
- What is a split-out?
The adjustment by the applicable appraisal district to reflect taxes owed on only that property which
has been retained by the owner. This often occurs when an owner sells or deeds part of his real
property to another.
- What is a tax master?
A person specifically appointed by a court or courts of competent jurisdiction to specifically handle,
including though trial, ad valorem tax lawsuits in a particular county. Often referred to as an
associate judge. Tax masters are not used as part of the appraisal dispute process.
- Do all counties use tax masters?
No. Some counties will assign tax cases to its regularly established courts in the same rotation way
that other cases are assigned to courts in that county. Still other countries will assign tax cases to
a specific regularly established court of competent jurisdiction.
- What is a taxing entity?
A city, county, school district, hospital district or any other political unit of the state authorized to
impose property taxes.
- What is a tax rate?
The proportion of the appraised value which must be paid to taxing entities annually. The appraised
value may be lower than the market value because of either exemptions or the homestead property
tax cap. Many properties are subject to taxes from several entities. Customary practice is to refer to
the total tax rate for all tax entities as "the tax rate".
- Who sets the tax rate?
Tax rates are set by each taxing entity.
- When does an unequal appraisal occur?
When the market value for a property exceeds the market value established by the appraisal district
for comparable properties after making reasonable adjustments. Unequal appraisal sometimes occurs
when properties are selectively reappraised following their acquisition. In other cases it occurs
because the appraisal district has inaccurate data for a property or submarket. It can also occur when
the appraisal district reappraises the market value for only a portion of properties in an area. Property
owners can appeal both market value and unequal appraisal annually in Texas.
- What is a redention penalty?
Chapter 22, Texas Tax Code, requires owners of business personal property to file a rendition
describing the property with the chief appraiser by April 15 of each year and also prescribes the
penalty for failure to comply. The rendition penalty is a penalty created by the Texas Legislature on
those businesses failing to file their business personal property rendition, or filing their rendition late.
The rendition penalty is generally equal to 10% of the amount of property taxes ultimately imposed
on the property.
- What is the quickest and easiest way to lower one's property taxes?
Taking advantage of all exemptions that apply
- What are some of the most common errors in computing an appraisal value?
Some of the most common errors can relate to land use, legal description, zoning, acreage, building
description, improvements, building size and comparable sales.
- When protesting an appraisal, should I tell the apprisal district my opinion of the value?
Generally, no. This might act to pre-set a lower limit during negotiations.
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