Are you lining Uncle Sam’s pockets? After today’s read, you may realize that you’ve been overpaying on your property taxes due to a simple oversight in valuation.
Building wealth in real estate requires property tax management. But many in our industry don’t realize that a build-up of inaccuracies in property tax valuations has cut a big hole in their money pouch.
As a taxpayer, you have a right to challenge these overvalued assessments. Perfect property tax protests by following our guide, and learn how to reduce your tax burden and maximize your profit!
A Punch to Your Profit
At the start of every year, qualified appraisers evaluate each home and assign it a value. The government takes that number and multiplies it by the total tax rate. Property tax rates and regulations vary by state. In Texas, for example, the average property tax rate is 1.60%, New Jersey has the highest average rate of 2.47%, while Hawaii has the lowest rate of 0.29%.
Your property taxes can significantly impact your profitability. If, for example, the Texas home you own appraises for $300,000, then the government will require 1.60% of that price, or $4,800.00 each year in property taxes. But let’s say that you think the appraiser overshot your home value by $50,000. If so, you’re paying the government an extra $800 yearly on that property alone.
As a real estate investor with multiple properties, these taxes rack up. Bad assessments can make or break your budget and crush your profit margins each year.
What Is a Property Tax Protest?
A property tax protest is a process that aims to lower the appraised value of your home and, subsequently, the amount of taxes you pay on that property annually. Before you move forward, discover the following steps for a successful property tax protest below.
When You Should Protest Property Tax
Protest your property taxes if your assessment includes:
- Inaccurate property descriptions, like room count or square footage.
- A higher value than similar properties in the neighborhood.
- Outdated or incorrect information about your property.
Events like natural disasters or shifts in the local real estate market could also necessitate a reevaluation.
How to Protest Property Tax Effectively in Texas
Each year, between April and May, every Texas property owner will receive an annual property tax assessment notice from your local tax assessor’s office. This notice provides details about your property’s assessed value and corresponding taxes due. Many local tax assessor offices also have online portals where you can review tax records and historical data on your property.
Vigilantly review your property tax assessment for overvaluations. If you disagree with your home’s appraised value, you have the right to file a protest with your Central Appraisal District.
Your notice provides information on procedures and deadlines if you wish to challenge or appeal the assessment.
- Carefully read your notice for instructions, respond promptly, and adhere to deadlines when filing a protest. Research the current appraisal protest process. You may find special exemptions like, for example, disaster exemptions for homeowners whose houses were damaged by severe weather conditions.
- Decide to do it yourself or hire help, like SmartEgg (our property management services handle property tax protests). It can be useful to seek out a professional property tax consultant in your area. An external organization can ensure you’re fully prepared or help you decide if your appraisal is worth appealing.
- After filing a protest, gather all necessary evidence and documentation to prove your case during your hearings. You’ll soon receive a written notice detailing the time, place, and subject matter of both an informal hearing and a formal hearing (which is only necessary if no conclusion can be reached at the informal hearing). Prove the assessment was incorrect with compelling evidence like:
- Property surveys
- Engineering reports
- Receipts or estimates for repairs
- Blueprints or architectural drawings
- Deed records
- Assessments of similar properties in your area (look for properties with similar age, condition, land size, square footage, and construction quality to yours)
- Photographs of your property or comparable properties
- Newspaper articles
- Supporting statements from contractors or independent appraisers
- Calculations of the median level of appraisal
- Present your case at the hearing. Stay on topic, support your claims with rational evidence, and don’t discuss your property taxes (the hearing is to protest the property’s appraisal value, not your tax bill!).
- Wait for your written notice. After the hearing, the evidence you presented will be reviewed. If an agreement is reached, a written agreement will be signed and the case will be closed. If not, you can move on to a formal hearing before an appraisal review board (ARB), usually within 45 to 90 days of the informal hearing.
Lighten the Load
Real estate is hard work, but it doesn’t have to burden you. Lighten your tax load by hiring a professional to protest your property taxes for you. At SmartEgg, our property management team successfully handles property tax protests.
When you’re ready to pass off the painful parts of property management, we’re here for you. Let’s talk about building your future wealth.