We received an email from one of our past clients just last night asking for comparable home sales prices (comps) for his neighborhood. When he saw that the true value of his home had risen $100k in 2 years he decided it may be time to sell and make some money. That’s good news for him…and maybe you, too. But big increases in appraised values can result in big increases in taxes (as you well know). Since none of us want to pay any more taxes than required, it’s important to know if the value the county determined is accurate.
Here are some important questions and answers:
1. What is a tax appraisal? The county assigns a monetary value to your home’s worth, and you pay taxes on that value to the county, city, and school district you live in (& in some instances to county hospitals). The tax appraisal only shows the value you’re paying taxes on, not necessarily the true market value of your home.
2. How does your tax appraisal affect you? Depending on where you live, you most likely pay taxes in the range of 2-3% of your appraised value on an annual basis. As the appraised value of your home increases, so does the amount of taxes you pay each year.
3. How is the value of your property determined? An appraiser from your county’s appraisal district supposedly drives by your property, observes exterior features, researches and discovers values in a your area, and evaluates the market thus placing an updated value on your property.
4. Why does the amount change each year? As the market fluctuates, so does the appraised value of your property. In most cases, it will rise every year.
5. Who determines the tax rate? The County Appraisal District only appraises property. The local governing bodies determine the tax rate.
6. How is your tax rate determined? After determining the taxing unit’s total budgetary needs, the elected governing body decides what actual tax rate it must levy to generate the amount of revenue needed.
7. Is the tax value what your house is actually worth? Not necessarily. Typically the tax value is below the true market value. In most cases, your house will sell at a higher price than the tax district’s value.
8. What are your options? Can you avoid paying this? No, you are required to pay your taxes. You can either do so in one lump sum annually or “escrow” your taxes in your monthly mortgage payment. There are exemptions for homeowners, persons over 65 years of age and disabled veterans. If your value notice fails to indicate any exemptions or special valuation to which you feel entitled, contact your appraisal district.
9. What can you do if you disagree with your value? a. Have an informal review with an appraiser in the county office. Take good comparables with you (The Tomlin Team is happy to provide them to you). b. If an agreement is not reached with the appraiser, then you can file a written protest for a hearing before the Appraisal Review Board (ARB). You will be notified of your hearing date and time once your protest is filed. Evidence must be presented to the ARB in the following manner: In person, by an authorized agent, or by a notarized sworn affidavit. At the conclusion of the hearing, the ARB will issue an order determining value and inform you of the outcome.
10. Who is the Appraisal Review Board? The ARB is an independent panel of citizens responsible for hearing property protests.
11. Are there any disadvantages to you if you appeal? No. In fact, your local government encourages you to appeal if you sincerely question your assessment. Taxing jurisdictions would like for all taxpayers to be satisfied within the legal limits set out by the State, and at the same time for everyone to be on a fair-share basis.
12. What value is there in appealing/protesting? In the majority of cases when an appraiser finds the taxpayer’s appeal to be fair and reasonable, an adjustment is made immediately. This adjusted value will stay with the property for 2 years before another adjustment is made. This can save you hundreds, perhaps thousands of dollars.
So what should you do in response to the tax appraisal letter you received?
OPTION 1 – APPEAL (the deadline for filing a protest is May 31)
You have the right to protest (appeal) your tax valuation. Surprisingly, most people do not file an appeal. However, those who do appeal typically get a reduction. You DO NOT need to pay an attorney to do this. The Tomlin Team can provide you with market comparables (otherwise known as comps) at no charge to help you determine the accuracy of the tax appraisal you received. If the comps show that you have a reasonable protest, then take them to your county appraisal district and have an informal conversation with a representative. Typically, if the data is strong enough to prove that your appraised value should be lower, the county tax office will reduce the amount without the hearing before the Appraisal Review Board (ARB). They will almost always reduce your assessment just for taking the time to go by.
Your likelihood of getting a reduced appraisal tends to increase by going to the County office in our experience, although the option to mail your protest in exists as well. Follow the instructions on your appraisal notice for mailing.
OPTION 2 – REST
If market comparables show that your home’s true market value is greater than the tax appraised value, then there’s no need to take any action. This simply means you’re paying less in real estate taxes than you could be.
Are there any other solutions to saving money?
REFINANCE OR RESTRUCTURE YOUR MORTGAGE LOAN
If the existing mortgage on your home has an interest rate higher than 4.5%, you may want to refinance now (whether you protest your taxes or not)! You can save hundreds of dollars per month by doing so. You may even be able to waive your PMI (premium mortgage insurance) depending on the equity you have in your home. This can save you considerable money as well. We will be happy to introduce you to our trusted mortgage partners if either of these apply to you. Just let us know if you would like for us to make an introduction.
CONSIDER SELLING IN THIS SELLER’S MARKET
This may be your least desirable option, but it’s worth considering. Just as our past client who emailed us realized for his situation. If obtaining your comps proves you can get far more for your home than you ever imagined, perhaps the idea of selling would interest you. Most would say, “But I don’t want to become a buyer in this market!” Keep in mind that downsizing may be profitable for you. It may put a considerable amount of cash in your hands to pay down debt or to put toward something desirable while still reducing your monthly payment. Even leasing for a year or two may be a good option for some in order to wait for prices to soften. We’ll be happy to have this conversation with you as well if it’s in your best interest.
Have specific questions? We are here for you, at no charge, to simply answer your questions. Feel free to email us at email@example.com or call/text us at (214) 726-2805.
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