First Time Homeowner Noob Property Tax Questions

I heard that property tax in TX (I live in Collin county) can only increase by 10% at most a year, is this true? If so is it only for certain counties or if you have homestead exemption? I bought my townhouse in May and at the time we could not find the 2010 appraisal information yet but the house was severely under valued (probably because it sat vacant for several years and was a foreclosure).

Fast forward to this month, I got a tax bill that said the value went up 45% from 2009 to 2010 (new value is close to what I paid for the place). Obviously this is a huge jump over last year. The block of 5 townhomes (1 building that was foreclosed) that were sold together all got hit with the same increase while the people that had been living in my neighborhood for several years are all paying about 6-8% less and have steadily declining values the last 3 years.

Do I have any recourse to get the taxes adjusted down? If the 10% max increase rule is true how can I get the value adjusted? Is the time to protest already past? Any advice for a first time homeowner is much appreciated.

Search for 'Collin County appraisal protest'.

The property tax value is often "reset" when there's a sale of the property (like yours). It's not usually "reset" when other similar, nearby properties sell (your neighbor's circumstance), although yearly adjustments are supposed to take comps into consideration.

By all means, go ahead and protest. Be aware, though, that if you paid, say $100K and they now value your property at $100K (even if it was $50K before you bought it), you may have a hard time convincing them that the value is way less than you paid. Would *you* believe you if you walked into the board and said, in effect, "I paid 45% too much for my house?"

I'm obviously not expecting them to put it back down to the value last year but in line with the neighbors would be nice. Is it too late to protest?

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When is the Protest Deadline?
You must file a written protest no later than May 31 or 30 days after the Collin County appraisal district mailed a notice of appraised value to you, whichever date is later. Note that the deadline is 30 days after the Collin County appraisal district mails the notice, not its receipt. There are exceptions.

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http://www.collincountyappraisaldist...opertytax.html

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Originally Posted by POS Racing

http://www.collincountyappraisaldist...opertytax.html

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Thanks, I think I fall into the exemption in that they just mailed my notice of value to me. It looks like under the Homestead act they can only raise the rate 10% a year at most but I can't apply for that until next Jan and by then the increase from this year will already be in the books so that doesn't help me much. (That and Collin County doesn't offer Homestead Exemption Decreases).

Is the best thing to do just call the Collin County Appraisal District and schedule a hearing? What type of info should I bring besides comps of similar homes in the neighborhood?

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Originally Posted by cwisenheimer

The property tax value is often "reset" when there's a sale of the property (like yours). It's not usually "reset" when other similar, nearby properties sell (your neighbor's circumstance), although yearly adjustments are supposed to take comps into consideration.

By all means, go ahead and protest. Be aware, though, that if you paid, say $100K and they now value your property at $100K (even if it was $50K before you bought it), you may have a hard time convincing them that the value is way less than you paid. Would *you* believe you if you walked into the board and said, in effect, "I paid 45% too much for my house?"

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True, but on the other hand how would they answer about valuing the house so low the last 3-4 years? The condition of the home didn't change a bit from when it was sitting there vacant to when I bought it. No fixes, upgrades etc since it was brand new and never lived in and the builder was foreclosed on.

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Originally Posted by CosmosMpower

True, but on the other hand how would they answer about valuing the house so low the last 3-4 years? The condition of the home didn't change a bit from when it was sitting there vacant to when I bought it. No fixes, upgrades etc since it was brand new and never lived in and the builder was foreclosed on.

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They will just say it was undervalued. They are "correcting a mistake."

I'm not siding with them, you know. I'm just telling you what their position will be.

Did the previous homeowner have a disability exemption, which would have caused their rate to be locked in at the lower rate? A person with medical disabilities may cause the value to remain at the same level for years, but after you buy it, they are alowed to raise the rate to the going rate. The homestead exemption gives you a discount on the school taxes, which is the majority of the tax burden. Your tax statement should tell you if this is the case or not.

Did you buy in Craig Ranch?

Contact them and ask.

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Originally Posted by CosmosMpower

Thanks, I think I fall into the exemption in that they just mailed my notice of value to me. It looks like under the Homestead act they can only raise the rate 10% a year at most but I can't apply for that until next Jan and by then the increase from this year will already be in the books so that doesn't help me much. (That and Collin County doesn't offer Homestead Exemption Decreases).

Is the best thing to do just call the Collin County Appraisal District and schedule a hearing? What type of info should I bring besides comps of similar homes in the neighborhood?

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As POS already posted you're past the protest deadline. You're stuck for this year.

On our local HOA forum most of the discussion is about how to reduce the tax valuation and then the exact same people are complaining about property values being low. So they are driving down their homes value to lower taxes and then complaining about it.

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Originally Posted by HudsonHawk

On our local HOA forum most of the discussion is about how to reduce the tax valuation and then the exact same people are complaining about property values being low. So they are driving down their homes value to lower taxes and then complaining about it.

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In a perfect world the County tax values would equal market value. Unfortunately that is far from the case in Texas.

Since Texas is a no report (or I should say voluntary report) state for purchase prices the county appraisers do their own estimations. This means you can argue down your appraised value with the county, all the while the actual market value could be increasing.

The 10% rule doesn't apply to a reset value. They could actually set your value at the sales price if they wanted to. The rule says they can't change if from year-to-year by more than 10% based on an established value. You changed the market value of your house by buying it.
You can generally protest the value and get some relief, or request an appraisal, which you might have to pay for.

The upside is that once you get the value established, you won't see big increases from year-to-year.

+1 on ^^ and over the last few years the appraisal districts have been getting way more accurate data in order to keep taxes coming in with the economy taking a dump.

Stay chummy with your agent if you were happy with them and work with them to pull comps for annual protests. They're generally agreeable to it in order to maintain a good relationship and in the hopes that you'll use them to list when you decide to sell or you'll refer them to someone.

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Originally Posted by Radio-Active

Did the previous homeowner have a disability exemption, which would have caused their rate to be locked in at the lower rate? A person with medical disabilities may cause the value to remain at the same level for years, but after you buy it, they are alowed to raise the rate to the going rate. The homestead exemption gives you a discount on the school taxes, which is the majority of the tax burden. Your tax statement should tell you if this is the case or not.

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There was no previous homeowner, builder built it in 07, sat vacant until I bought it as a foreclosure. Bank foreclosed on the builder and sold to me.

My agent already helped me pull all the comps, the 5 new buyers got their values bumped up to right above the purchase prices each whereas the other 65 homes in the neighborhood are paying about 8% less than the new buyers. This is in Frisco square.

Could it be that the prior tax value was low because it did not yet have a certificate of occupancy?

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Originally Posted by CosmosMpower

There was no previous homeowner, builder built it in 07, sat vacant until I bought it as a foreclosure. Bank foreclosed on the builder and sold to me.

My agent already helped me pull all the comps, the 5 new buyers got their values bumped up to right above the purchase prices each whereas the other 65 homes in the neighborhood are paying about 8% less than the new buyers. This is in Frisco square.

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Someone probably chose to report the sales price, giving the appraisers new information to go on. Older ones will typically lag some.

Yup. Your neighbors will get boned next year.

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Originally Posted by Titus

Could it be that the prior tax value was low because it did not yet have a certificate of occupancy?

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I'm guessing that's what it is, when the 5 sat vacant the values were about 25% less than the occupied homes. In any case it's not a big deal just wanted to see if I had any options.

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Originally Posted by ckearns

Yup. Your neighbors will get boned next year.

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I would think they would've already gotten screwed this year if it was going to happen. Our values went up to market value for 2010 and theirs actually went down slightly from 2009 to 2010.

Be certain you're looking at the Assessed value and not just the Market value. You're taxed on the Assessed value. If your neighbors are being taxed on substatially lesser assessed values than you are (similar houses), then you can pull together some "comparables" to document your protest at the Assessor's Office. To the best of my knowledge, the 10% rule is statewide. It would be interesting to know how the Assessor learned what you paid for the house, as that's not public information in Texas.

Do not rely completely on comps. Take photos and bring all your data from the purchase when the time comes to meet with the appraisal district. i am not sure in collin county but in dallas, during the last few weeks before the deadline dallas they are pretty slammed and if you have your s together will give in a bit. its a negotiation so shoot lower than you want and expect to compromise.

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Originally Posted by Titus

Could it be that the prior tax value was low because it did not yet have a certificate of occupancy?

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What Todd said. Often the value of a residence goes under reported until the first tenant takes possesion.

My home was built in 1999, but was used as a model home for the neighborhood until 2003, when it was sold to the previous owner. The appraised value jumped over $100k in '03, up to what the first owner's paid for it.

You can fight it, but I think you'll be wasting your time. What you paid when you moved in is a pretty good indication of market value, so you'll be hard pressed to put together a convincing case that it should be valued at less than what you paid.