Save Your Clients Money By Helping Them Reduce Property Taxes

by James McClister


Homeowners in Texas pay higher property taxes than most other places in the U.S, according to a report from WalletHub. But they may be paying too much.

Texans’ property taxes are 1.93 percent; the 47th highest in the country. There are only four states – Wisconsin, New Hampshire, Illinois, New Jersey – in which homeowners pay a higher tax; though, the margin from No. 47 to No. 51 (51 because Washington, D.C. is included in the calculations) is only 0.36 percent.

Tax-rates.org, which tracks median property tax rates at the state and county level, reported that for a home priced at $125,800, homeowners in Texas pay a median $2,275 annually. Among the nine counties that make up the greater Houston area – Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, Waller – homeowners are paying more than the state median in five.

County Median Property Tax
Austin $1,903
Brazoria $2,851
Chambers $2,099
Fort Bend $4,260
Galveston $2,836
Harris $3,040
Liberty $1,254
Montgomery $3,123
Waller $1,968
Statewide $2,275

In a post written for Rebusiness Online, attorneys David Leonard, Jonathan Hyman and Scott Funk of Gary Reed & McGraw P.C. address Houston’s exorbitant property taxes. They claim that “the collapse of oil and natural gas prices has reduced the value of commercial, industrial and residential properties,” voiding the accuracy of previous property tax appraisals. As a result, judicial challenges are becoming an “increasingly popular” option for residential and commercial property owners “due to their effectiveness in reducing appraisals to align with fair market values.”

However, to lodge an adequate legal argument, Leonard, Hyman and Funk stress the importance of preparation and diligence; and in their post, provide bulleted insights into building an effective case using the state’s “equal and uniform” rule.

The Texas Constitution – “Equal and Uniform”

The trio of attorneys admits the “equal and uniform” judicial challenge is not the most common avenue for property owners to challenge property taxes, but under the right circumstances it can be a “particularly effective” strategy. It leverages the state constitution’s rule that all taxation be “equal and uniform,” and pits the value of a property not against the wider market but rather comparable properties. According to Texas law, property tax appraisals are subject to reduction if the plaintiff can prove the appraised value “exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted.”

To help a client evaluate whether their home meets the criteria to have its property taxes challenged under the “equal and uniform” rule, here are the steps the Gray Reed & McGraw attorneys recommend:

Gather Comparables – Agents should have no trouble in compiling neighborhood comparables, as it’s already a common practice when pitching a home. The attorneys remind in their post that when determining what is “comparable,” agents should consider “location, square footage of the lot and improvements, property age, property condition, property access, amenities, views, income, operating expenses, occupancy, the existence of easements, deed restrictions or other legal burdens that could affect marketability.”

Apply Adjustments – With the “reasonable number” of comparable properties compiled, the agent, on the owner’s behalf, will need to identify the appraised values of the properties and adjust them to their own, considering the factors that effect value, such as “location, age, depreciation, physical characteristics of the property and economic factors.”

Think in Median Terms – Once the appropriate adjustments are applied, the final and most important step is refining the collective values down to a single median. With this figure, assuming it is lower than the property in question, the owner will be able to effectively argue a reduction to their property tax rate.

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