Real Estate for Beginners Residential Property Taxes

When your property is under appeal the County Board of Taxation can adjust your home's value to the common level. The taxpayer should know the average ratio in the municipality where the property under appeal is located before filing a tax appeal. Remember the ratio changes annually on October 1, for use in the subsequent tax year. Also, remember this adjustment to the common level is not used in the year of revaluation or reassessment when all properties have been brought to 100% of market value.

Most appraisal districts give minimal consideration to requests for adjustments based on deferred maintenance, unless the property owner provides repair costs from independent contractors. There are some exceptions where a cooperative informal appraiser or sympathetic ARB will take an owner's estimate of deferred maintenance and make adjustments based on those costs. Most appraisers and ARB members are much more inclined to make adjustments if third-party cost estimates are provided. In addition, the appraisers and many ARB members are inclined to only deduct a portion of the total cost using the argument, "we've been giving a replacement reserve allowance for this item for the past years and it'd be double-dipping to deduct the whole value off it in the current year." While this is an incorrect appraisal argument, it does tend to be the practice at many appraisal districts. The reality is, the cost of curing deferred maintenance is deducted from the offer by a prospective buyer.

Beginning September 2005, owners of properties with an assessed value of $1 million or less may file a request for binding arbitration. The owner must file with the appraisal district no more than 45 days after receipt of the notice of the ARB's decision. The binding arbitration option is interesting because it includes a loser pays provision. The appraisal district pays for the arbitrator's fee if the final value is closer to the owner's opinion of value, and the owner pays for the binding arbitration if the final decision is closer to the appraisal district's opinion of value. Binding arbitration was passed to provide an alternative to judicial appeals, which can be expensive to prosecute.

Many investors have asked why Texas property taxes keep increasing even though their revenue has declined and operating expenses have increased. Since appraisal districts value so many properties, they are often not aware of "softness" in a submarket. In addition, some appraisal districts have been slow to recognize the huge increases in insurance expenses. Since property taxes are such a material expense, investors have realized they need to review assessments annually. Most Texas real estate investors appeal their property tax assessment annually.

When you pay your taxes you should make sure to receive a receipt. This is needed for your tax records as well as showing proof of payment if the community would ever say you still owe money on your taxes After paying your property tax bill, you can then claim it on that year's tax return.

Property tax bills are usually divided into three categories including: school districts, county and municipality. Approximately 60- to 70-percent of property taxes are allocated to schools to cover education costs. The remaining 30- to 40-percent are distributed amongst county and local government agencies.

Paying your property taxes. As a real estate beginner, you want to be sure that you are paying the taxes on your property. There are a number of ways to do this, including paying to the tax commission quarterly or yearly. However, the simplest way to pay your taxes is to have them integrated into your home loan. They can be added to your monthly mortgage payment, making it a relatively hassle-free way to make sure everything is taken care of.

Fortunately there are several forms of property tax relief that can provide a lot of ease during low income periods.
These types of relief fall into different categories and provide tax reductions in different ways.
The different categories of property tax relief address different problems.

The market value is what your property would sell for on the open market, without any "undue influences," like being in a state of foreclosure, structural issues with the property, short sales time frame, etc. Again it's what your property sells for under a normal sale.The assessment ratio is very important to calculating your property taxes and is what is sometimes referred to as your "property tax value". What cities do is multiple your market value, by the assessment ratio, the resulting number is the property tax value. For example if your properties market value is $500,000 and your cities assessment ratio is 80% your property tax value would be: $500,000 x .80= $400,000 property tax value.Assessment ratios vary from state to state and from jurisdictions. Your assessment rate could be totaling different than your neighboring town.

You have the right to dispute the tax assessment on your property. This is particularly true if you fell that you have been overcharged. Remember that property assessors can also make mistakes. As a homeowner, you need to check the accuracy of the valuation statement. Look for the most common mistakes that can be committed by an assessor. These mistakes include incorrect address, inflated lot sizes, incorrect number of rooms, and inaccurate square footage.