Texas Property Tax Appraisal Protest Process

As lawyers in Houston Texas, we are often asked about how the property tax appraisal protest process works in Harris County and throughout Texas.   A taxpayer can protest their property value for property tax purposes by following the procedure below.  A taxpayer can protest the valuation of property for tax purposes for several reasons:
•    the value the appraisal district placed on the property was too high;
•    the property was unequally appraised;
•    the appraisal district denied a special appraisal, such as open-spaced land, or incorrectly denied an exemption application; or
•    several other less common reasons listed in Texas Tax Code Section 41.41.

The taxpayer should file his or her Notice of Protest with the Appraisal Review Board (“ARB”) no later than 30 days after the appraisal district mailed the Notice of Appraised Value to the taxpayer.  The ARB will notify the taxpayer at least 15 days in advance of the taxpayer’s hearing.  At least 14 days before the protest hearing, the appraisal district should mail a copy of ARB procedures, a statement that the taxpayer can inspect and obtain a copy of the data, schedules, formulas and any other information the chief appraiser plans to introduce at the hearing.  Said information is not required to be delivered, it must only be made available to the taxpayer.  Many counties have informal hearings that are used to settle protests without a formal hearing.  If the protest is not resolved at the informal hearing, a formal hearing with the ARB will be held.  The ARB is not bound by discussions or offers made at the informal hearing.  Copies of any documents, photographs, plans, etc. submitted at the informal hearing become part of the ARB hearing file and will likely be reviewed by the ARB before the formal hearing.  If third-party evidence is submitted, the information must contain a statement of authenticity or be accompanied by a business records affidavit.

Evidence used to dispute the appraised value should be significant.  The ARB requests the following type of documentation for real property value hearings:

Sale of the Property under Protests
•    Closing Statement – full and complete document signed and dated, which includes a legal description of the property being transferred.

Income Approach
•    Previous year rent roll and income statement – typically, three years of data should be provided although additional year’s data may be required.  Documentation of lease offering rates and lease concessions from leasing agent as of January 1 of the subject tax year and an explanation of any line items.

Cost Approach
•    Construction contract(s) – signed and dated, including a detailed description of the work to be performed
•    Certified AIA documents, in detail.
•    Subcontracts – documentation must reflect all hard and soft costs.
•    IRS records.

Market Approach
•    Independent fee appraisals – complete copy of the appraisal report.
•    Confirmed sales of comparable properties including: photographs, property description, location, land area, building area, year built, grantor, grantee, date of contract, sales price, financing terms, basis of sale, actual or Pro forma income and source.

The ARB requests the following type of documentation for business personal property value hearings:
•    CPA statements;
•    Certified balance sheets;
•    IRS returns;
•    Actual books and records showing acquisitions by year or purchase, or
•    Receipts, invoices, or leases.

Evidence of valuation changes after January 1 are not taken into account until the next tax year.

A taxpayer is entitled to appeal an order of the ARB determining a protest by the taxpayer as provided in Subchapter C of Chapter 41 of the Texas Tax Code (quoted in paragraph one) to district court.  A taxpayer who wishes to appeal must file a petition for review with the district court within sixty (60) days after the taxpayer received a notice that a final order was entered from which an appeal may be had or at any time after the hearing but before the 60-day deadline.  Failure to timely file a petition for review bars any judicial appeal pursuant to Texas Property Code Chapter 42.  The petition for review must be brought against the appraisal district.  The review is by trial de novo.  The court may not admit in evidence the fact of prior action by the appraisal review board or comptroller, except to the extent necessary to establish its jurisdiction.

A property owner who prevails in an appeal to the court under Section 42.25 (excessive appraisal) or 42.26 (unequal appraisal) may be awarded reasonable attorney’s fees.  The amount of the award may not exceed the greater of: (1) $15,000.00; or (2) 20 percent of the total amount by which the property owner’s tax liability is reduced as a result of the appeal.

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