1. Taxpayer Remedies in the Texas Property Tax Appraisal Process Addison, Texas October 4, 2017
TAPS 2017 Seminar
John Brusniak
Brusniak Law PLLC
13155 Noel Road, Suite 1850
Dallas, Texas 75240
(972)
@TxPropTaxAtty

3. THE PROPERTY TAX
How did we get here?

4. THE PROPERTY TAX

5. THE PROPERTY TAX
Sign here, King…

6. THE PROPERTY TAX
Paying it Forward

7. Equalization & Break from the Old
THE PROPERTY TAX
Equalization & Break from the Old

8. THE PROPERTY TAX
Business as Usual

9. THE PROBLEM
Texas Constitution – ALL real property and all tangible personal property shall be taxed at its market value
Texas Property Tax Rates are HIGH and GROWING
From 2008 to 2016, Houston’s combined tax rate went from $2.52 / $100 to $2.65 / $100 – 5% increase
From 2008 to 2016, Dallas’ combined tax rate went from $2.50 / $100 to $2.72 / $100 – 9% increase

10. THE PROBLEM Assume a $500,000 30-year mortgage @ 2.7%
Total Interest $230,076

11. THE PROBLEM Assume a $500,000 taxable value for a property.
Assume no increases in value for 30 years.
Assume a 2.7% tax rate that never increases.
Per Annum taxes would be $13,500
Total taxes paid in 30 years $405,000

12. THE PROBLEM 254 Texas Counties
253 Texas Appraisal Districts (Potter and Randall Counties share)
Each its own fiefdom

13. Meet Your Chief Appraiser
THE PROBLEM
Meet Your Chief Appraiser

14. THE PROBLEM HOW DO YOU ATTACK THE PROBLEM? Market Value Equity
Exemptions / Abatements
Special Valuations

15. How the Tax Appraiser Sees Your Home

16. How You See Your Home

17. How You Present Your Home

18. MARKET VALUE
Appraisal vs. Mass Appraisal Texas Central Appraisal Districts are tasked with valuing millions of properties as of Jan 1st each year. The appraisal concepts discussed earlier are applied to many properties simultaneously. This process includes standardized procedures and statistical modeling.

19. MARKET VALUE Texas Legal Standard of Market Value
“Market value” means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:
Exposed for sale in the open market with a reasonable time for the seller to find a purchaser;
Both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and
Both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.

20. MARKET VALUE

21. MARKET VALUE

22. MARKET VALUE

23. MARKET VALUE

24. MARKET VALUE

25. EQUITY
Constitution requires taxation to be Equal and Uniform.

26. EQUITY
Appraised Value of Comparable Properties appropriately adjusted. Reasonable Number

27. EXEMPTIONS General Exemption Qualifications Non-Profit Entity
Must own and use Property
“Exclusive” or “Primary”
Must meet precise Statutory Definition
Only Complimentary Ancillary Uses Allowed
Up to 3 years Active Construction

28. EXEMPTIONS
Must find authorization in the Texas Constitution (or Federal Constitution)
Must have specific Statutory Authorization
Most are not self-executing
Must dot all the “i’s” and cross all the “t’s”
Types
Property Not Held for the Production of Income
Implements of Husbandry
Churches
Schools
Governmental Property (Used for governmental purposes)
Charitable Institutions
YMCAs

29. FREEPORT Interstate Freeport Inventory Acquired or Imported into Texas
For purposes of assembling, storing, manufacturing, processing or fabricating by the Importer
Exported from Texas within 175 Days (Exclusions: Oil, Natural Gas, Petroleum Products)
Intrastate Freeport Inventory
For purposes of assembling, storing, manufacturing, processing or fabricating by the Importer
Exported from Texas or transported to another location in Texas within 175 Days (Exclusions: Oil, Natural Gas, Petroleum Products, Aircraft, Dealer’s Motor Vehicle Inventories, Dealers’ Vessel and Outboard Motor Vehicles, Heavy Equipment Inventories, Retail Manufactured Housing Inventories)
May not be detained in a location owned by the owner of the inventory

30. HOMESTEAD
Mandatory Homestead Exemptions County $3,000 School District $25,000 Disabled or over 65 $15,000 Completely Disabled Veteran 100% Partially Disabled $5,000-$12,000 Permissive Homestead Exemptions All Taxing Units give Homestead Minimum $5,000 Maximum 20% Disabled Minimum $3,000

31. Limit on Annual Increases in Taxable Value 10%
HOMESTEAD EXEMPTIONS
Limit on Annual Increases in Taxable Value 10%

32. HOMESTEAD EXEMPTIONS
Tax Freeze Mandatory School District taxes paid in year of disability or 65 Discretionary All other Taxing Units Percentage Freeze may be carried to new home

33. HOMESTEAD EXEMPTIONS
Tax Deferral Affidavits Statutory Injunction 5% 181 days after no longer homestead

34. TAX INCENTIVES
Abatements Property Redevelopment and Tax Abatement Act Texas Economic Development Act Economic Development Agreements Tax Increment Financing Districts

35. SPECIAL VALUATIONS ALLOWED
Agricultural Land
Open Space Land
Timber Land
Recreational, Park and Scenic Land
Public Access Airport

36. Land in Carrollton, TX Market Value $2,742,351 Ag Value $7,354
Tax on Market $65,262.16
Tax on Ag Value $175.01

37. EXAMPLE #2 Land in Collin County, Texas: Market Value $2,400,348
Ag Value $7,615
Tax on Market $55,208.00
Tax on Ag Value $175.15

38. EXAMPLE #3
Land underlying Colonial Country Club – Fort Worth: $37,570 per acre ($977 tax dollars)
Land underlying Dallas Country Club: $36,110 per acre ($921 tax dollars)

39. WHY Valued at either their agricultural productivity valueOR
Restricted Use Value

40. BASIC AGRICULTURAL VALUE
FORGET IT!
Must be an actual farmer and get more than half of your annual income from farming
Annual Application

41. OPEN SPACE, LAND, AND TIMBER LAND VALUE
Welcome Everyone! Corporations! Partnerships! Everyone!
No minimum income requirements
Once an application is granted, it stays in effect until the property sells, the use changes, or the chief appraiser asks for a reapplication

42. HOW DO I GET IN ON THE FUN? OPEN SPACE AND TIMBER
Apply
Everything triggers off of January 1
Property must have been in agricultural use for the prior five years in urban areas OR five out of seven years in rural areas
In the year prior to application, property must have been used to the level of intensity for agricultural properties in that county
All types of animals allowed…except raising horses for recreational use
All types of crops

43. BAD NEWS CHANGE OF USE Rollback Tax: Current year value goes to market
Back assessment on the differential between market value and special value +7% interest
Cannot challenge market values at time of rollback

44. EXCEPTIONS Acquisition of conversion of use to: Government
Nonprofit cemeteries in counties with less than 100,000 people
Use of a portion as a homestead
Private school
Religious Use
Certain low-income housing
Certain housing for the elderly

45. WILDLIFE MANAGEMENT
Have to do three of the following in relation to indigenous wild animals:
Habitat control
Erosion control
Predator Control
Providing supplemental water
Providing supplemental food
Providing shelter
Making census counts to determine populations
Also: preserving endangered species and certain conservation or restoration projects
MUST HAVE BEEN IN OPEN SPACE LAND TO QUALIFY

46. KILLING THE GOLDEN GOOSE
Number One Cause: Inattentiveness
Fences down
Dirt bike riding
No weed control
No watering
Not Farming

47. RECREATIONAL, PARK, AND SCENIC USE
Simple
Primary use: golf courses
Deed restrict property to recreational park and scenic use for ten years
Valued a flood plain or significantly reduced values
Penalty for violation: five year rollback + 7% interest

48. Public Access Airport Property
Must be privately owned and used by public for “airport purposes”
Landing, parking, shelter, or takeoff of an aircraft
Accommodation of individuals engaged in the operation, maintenance, or navigation of an aircraft
Accommodation of aircraft passengers in connection with their use of aircraft or airport property
5 acres minimum
Deed Restricted

49. Informal Negotiations Appeals to the Appraisal Review Board
REMEDIES
Informal Negotiations Appeals to the Appraisal Review Board

50. REMEDIES
Arbitration State Office of Administrative Hearing District Court

51. QUESTIONS?