Property taxes are a substantial expense for Texas homeowners, averaging about $3,600 annually. To reduce this expense, property owners should annually review and consider appealing property taxes. While there is no guarantee that an appeal will be successful, a recent survey conducted by O’Connor & Associates indicates that 70% of property tax appeal are successful.

Since the mortgage company typically disperses payments, property taxes tend to be a stealth tax. Although the homeowner writes a check, including taxes and insurance monthly, the property tax component is not evident. The property tax component can become quite evident when the homeowner is asked to fund a deficit in the escrow account.

Although 70% of property tax appeal are successful, only 7% of homeowners appeal each year. Research indicates five primary reasons homeowners do not appeal:

1. The process seems overwhelming and they do not know how to appeal,

2. They do not think an appeal is likely to be successful,

3. They think their home’s assessed value is below market value and there is no basis for appealing,

4. They do not understand they can appeal on unequal appraisal,

5. They are busy and do not want to set aside time, given the presumption that “you can’t fight city hall”.

Why appeal?

Consider an appeal for a $150,000 house where the property taxes are reduced by 5%. This would reduce the assessed value by $7,500 and the property taxes by $225, based on a 3% tax rate. Since the typical appeal hearing takes less than an hour, these are meaningful savings for the time involved. Regularly appealing your property taxes will minimize the value, so you are assessed for less than most of your neighbors. Most of the property tax appeal are resolved at the informal hearing, which is the first step in the process.

How to appeal

The first step to appealing annually is to send a written notice to the appraisal review board (ARB) for the county in which your home is located. Even if you have not received a notice of assessed value from the appraisal district, file a notice of appeal by May 31st for the following reasons:

1. The notice of assessed value can get lost in the mail,

2. A notice of assessed value is not necessary unless your assessed value increases by $1,000, and

3. You should appeal annually

You can file a notice of appeal by utilizing the Comptroller’s form available at www.cutmytaxes.com or by sending a letter to the ARB. The letter to the ARB simply needs to identify the property being appealed and the basis for your appeal. You should always appeal on both market value and unequal appraisal. Since the appraisal district staff is extremely busy during late May and early June, sending any data on the value of your property tax is probably a waste of time. At the same time you send your notice of appeal to the ARB, send a “House Bill 201″ request to the chief appraiser at the appraisal district. The House Bill 201 request will provide you a volume of information at a modest price.

Reasons for obtaining House Bill 201 information

Since most homeowners are not familiar with House Bill 201, you may be wondering what it is and when it became available. House Bill 201 is the term used by property tax consultants to describe provision 41.461 of the Texas Property Tax Code. This section reads as follows:

“at least 14 days before hearing on a protest, the chief appraiser shall: … inform the property owner that the owner or the agent of the owner may inspect and may obtain a copy of the data, schedules, formulas, and all other information the chief appraiser plans to introduce at the hearing to establish any matter at issue.”

The property tax code further provides the chief appraiser the right to charge up to $15 for each residence, and up to $25 for each commercial property owner for this information. However, there are limits on the cost per page an appraisal district can charge. Practically speaking, the maximum charge is $1 to $2 for a residence. In Harris County, most homeowners can print this information from the appraisal district’s web site once an appeal has been filed using the “I file” system.

This section of the tax code was added in 1991, but many appraisal districts have attempted to ignore this section of the property tax code for years and some still do. After discussing this section of the Texas Property Tax Code on a radio show in 2005, several listeners called back a week or two later to report certain appraisal districts were claiming to be unaware of this section. When O’Connor & Associates sent House Bill 201 requests to appraisal districts in 2005, some called us and said “what do you mean you want our information, we plan to use your information at the hearing to prove our value.” While these examples seem quaint and cute, it is surprising that 15 years after taxpayer friendly legislation has been passed, that appraisal districts are still ignoring property owners and tax consultants who ask for this information.

There are at least seven reasons to utilize House Bill 201 to obtain the information the appraisal district will use at the hearing:

1. It is an effective way to obtain information regarding both market value and unequal appraisal for your property tax appeal,

2. You will receive the appraisal district’s information regarding the size, condition and other qualitative and quantitative data for your house,

3. The information can be obtained for a nominal cost,

4. It is helpful to know what information your adversary will be able to use at the hearing,

5. Making the request limits what information the appraisal district can present at the hearing. If you do not request their information prior to the hearing, they can use any information available to them at the hearing. However, if you request the appraisal district information using a House Bill 201 request, they may only use information previously provided to you,

6. If they do not provide you information on market value or unequal appraisal in the House Bill 201 request, you win by default at the ARB hearing, and

7. In many cases, the appraisal district House Bill 201 information clearly supports a lower value.

Preparing for the hearing

When you receive the appraisal district House Bill 201 information, start by reviewing the appraisal district’s description of your home and ask yourself these questions:

1. Is the year built accurate?

2. Are the qualities and amenities accurate?

If the appraisal district overstates either the quantity or quality of improvements to your property, this is an excellent means to reduce your property taxes both for the current year and subsequent years.

Filing a 2525c Appeal

If the appraisal district has overstated the size of your home by more than 5% to 10%, even if you did not file a property tax appeal in previous years, consider filing a 2525c appeal. This will allow you to reduce the assessed value of your property for the current year and for prior years.

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April 19, 2009

Property Tax Payment

Taxing units usually mail their tax bills in October. The date of delinquency is normally February 1st.? If you have not received your tax bill by January 1st, you should contact your tax assessor to determine the amount owed.?

Property tax bills often include more than one taxing jurisdiction because some taxing jurisdictions combine their collection operations.? Likewise, certain properties will be subject to multiple taxing jurisdictions collected by different assessors.? Contact the central appraisal district for your respective county to determine the taxing jurisdictions which apply to your property.? Many county central appraisal districts now post their property tax data online.?

If you escrow taxes and insurance, then your mortgage company will pay the property taxes on your home.? You should receive a receipt from the tax assessor indicating payment has been made.? The receipt is important to retain, as many homeowners deduct property taxes for federal income tax purposes.

When Is the Deadline for Payment?

In most cases, the deadline for paying your property taxes is January 31. Taxes that remain unpaid on February 1 are considered delinquent. Penalty and interest charges are added to the original amount.

Taxes are due in one lump sum.? Some tax collection offices provide payment options, such as:

• ?Payment by credit card, typically with additional fees of 3% to 5%
• ?Deferment or installment plans for taxes on homestead properties for disabled property owners or property owners over 65 years of age
• ?Discounts for early payment
• ?Partial payment of your taxes

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If you are qualified for the over-65 or disabled homestead exemptions, you may pay your current taxes on your home in four installments. You must pay at least one-fourth of your taxes before the February 1 delinquency date. The remaining payments are due before April 1, June 1 and August 1, without any penalty or interest. If you miss an installment payment, you will face a penalty and also pay interest at 1 percent for each month of delinquency. You must indicate on your first payment that you are paying your home taxes in installments. Installment payments apply to all taxing units on the tax bill.

Homeowners whose residences are damaged in a disaster and are located in a designated disaster area also may pay their taxes in four installments, in the same months as over-65 or disabled homeowners.

What If my Taxes are Delinquent?

The longer you allow your delinquent property taxes to go unpaid, the more expensive and risky it becomes for you.

• Penalty and interest charges will be added to your taxes.
  Penalty charges and interest charges will be added to your tax balance. ?Private attorneys hired by taxing units to collect delinquent accounts can charge an additional penalty to cover their fees.? The following table details the potential penalties, interest, and attorney charges imposed on a delinquent property tax account.

Month?Penalties & Interest
February??????? 7%
March??????????? 9%
April????????????? 11%
May???????????? ?13%
June???????????? 15%
July?????????????? 32% to 37%*

*Collection Attorney Fees Vary by County, but are typically 15% to 20%.

Accounts not paid in full by June 30th of the year in which they become delinquent are normally referred to the delinquent tax attorneys for collection and incur an additional penalty equal to 15% - 20% of the total taxes, penalties and interest due.? Generally, any payment on the quarterly payment plan that is not paid before the delinquency date of the installment accrues a full penalty of 6% immediately, and begins to accrue interest at the rate of 1% per month until paid.

• You will receive delinquent tax notices.
  The tax collector will send you at least one notice that your taxes are delinquent. They often send multiple notices and warnings.
• You may have the option to set up an installment plan.
  Some tax collectors will allow you to pay delinquent taxes in installments for up to 36 months. They are not required to offer this option.
• You may be sued.
  The tax collector can take a delinquent taxpayer to court. All court costs will be added to the delinquent tax bill.
• Your property may be foreclosed upon.? You could lose your property!?
  Each taxing unit holds a tax lien on each item of taxable property. A tax lien automatically attaches to property on January 1 each year to secure payment of all taxes. This tax lien gives the courts the power to foreclose on the lien and seize the property. The property then will be auctioned and the proceeds used to pay the taxes.

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?Are there other options available to pay property taxes?

?Yes, specialized lenders exist who focus solely on property tax lending.? These lenders provide an alternative to the lump sum payment of your property taxes.? A property tax loan will immediately stop the added penalties, interest, attorney fees, and pending lawsuits for the county.? Most lenders offer flexible loan terms with repayment schedules up to 10 years.? Loans are available for almost any type of real estate as long as the borrower is not in bankruptcy, there is no IRS lien on the property, and the property is reasonably maintained. This includes residential, commercial, investment properties, and vacant land.?

?To learn more about property tax loans and the lending programs available visit Property Tax Funding, http://www.propertytaxfunding.com/, or call a loan officer at 877-776-7391.