Incredibly middle-aged question about home appraisal, taxes, blah
April 15, 2024 3:41 PM Subscribe
This is a question where I partly don't know what I don't know, so I have to bumble my way toward asking what I'm asking, but essentially I'm trying to figure out what's up with my home appraisal and whether I should be contesting it and, if it's too complicated to answer here, who I should be even asking. This in Texas and I'm not sure to what extent the question is localized.
So basically
-bought a house last year
-applied for the homestead exemption (is this a Texas thing?) which shields some of the value of your home from taxation ok btw I swear I'm not a libertarian who doesn't want to pay any taxes but anyway...
-paid my taxes last year
-was told by a friend that you should contest your appraisal every year just because it keeps your housing costs from creeping up too much
-received my appraisal for 2024
There's a bunch of stuff that seems vaguely wtf about it to me but part of it is just that I live in a housing market that really fucking popped off in the last few years. Looking online at past appraisals it looks like the appraisal went something like
2021: appraisal 200K, Value Limitation Adj* 15K, appraised net 185K
2022: appraisal 270K, Value Limitation Adj 75K, appraised net 200K
2023: appraisal 310K, Value Limitation Adj 90K, appraised net 220K
(I bought it in January 2023)
2024: appraisal 295K, Value Limitation Adj 50K, appraised net 245K
*I think this is the homestead thing but....no explanation on site!
There's another column called Improvement that tends to be like 150-250K every year and doesn't affect the net so I don't even know with that.
I realize this is a lot of detail but I've fudged it some and most likely we don't know each other so I feel ok about it. It also seems like asking about something dry and complicated, but I find usually someone is like "no, this is just a thing and after you've done it once, you get it." But basically: do I contest this even though the appraisal went down (though the net didn't)? But also kind of wtf is up with this?
So basically
-bought a house last year
-applied for the homestead exemption (is this a Texas thing?) which shields some of the value of your home from taxation ok btw I swear I'm not a libertarian who doesn't want to pay any taxes but anyway...
-paid my taxes last year
-was told by a friend that you should contest your appraisal every year just because it keeps your housing costs from creeping up too much
-received my appraisal for 2024
There's a bunch of stuff that seems vaguely wtf about it to me but part of it is just that I live in a housing market that really fucking popped off in the last few years. Looking online at past appraisals it looks like the appraisal went something like
2021: appraisal 200K, Value Limitation Adj* 15K, appraised net 185K
2022: appraisal 270K, Value Limitation Adj 75K, appraised net 200K
2023: appraisal 310K, Value Limitation Adj 90K, appraised net 220K
(I bought it in January 2023)
2024: appraisal 295K, Value Limitation Adj 50K, appraised net 245K
*I think this is the homestead thing but....no explanation on site!
There's another column called Improvement that tends to be like 150-250K every year and doesn't affect the net so I don't even know with that.
I realize this is a lot of detail but I've fudged it some and most likely we don't know each other so I feel ok about it. It also seems like asking about something dry and complicated, but I find usually someone is like "no, this is just a thing and after you've done it once, you get it." But basically: do I contest this even though the appraisal went down (though the net didn't)? But also kind of wtf is up with this?
Best answer: Have you checked out the state comptroller website? Here is an article that explains how houses are valued and how the homestead exemption helps reduce your property taxes.
The short answer is that your property valuation can only increase so much each year. Ignore the first two numbers in each year and just look at the "appraised net" - it goes up roughly 10% each year.
When I was a Texas homeowner I heard the same kind of apocryphal advice. For the year you bought the house (2023) it might make sense because you have a current and relevant value - the value you purchased it for. In future years I didn't see my property tax value rise as much as estimates from other sales in my area because the increase was limited by my homestead exemption, so it didn't seem worth the time to dispute the value. In times of falling home values then disputing the appraisal makes more sense.
posted by muddgirl at 4:17 PM on April 15 [1 favorite]
The short answer is that your property valuation can only increase so much each year. Ignore the first two numbers in each year and just look at the "appraised net" - it goes up roughly 10% each year.
When I was a Texas homeowner I heard the same kind of apocryphal advice. For the year you bought the house (2023) it might make sense because you have a current and relevant value - the value you purchased it for. In future years I didn't see my property tax value rise as much as estimates from other sales in my area because the increase was limited by my homestead exemption, so it didn't seem worth the time to dispute the value. In times of falling home values then disputing the appraisal makes more sense.
posted by muddgirl at 4:17 PM on April 15 [1 favorite]
Best answer: Small time real estate investor in DFW, Texas here.
You do not need to re-apply every year for your homestead exemption unless you move or the county appraiser sends you a form and asks you to (I've never heard of this happening).
In regard to contesting your appraisal, this works differently in different counties. In Denton county last I did it, you just notify them that you're contesting and they'll do a specific audit of your property rather than whatever excel spreadsheet they use for a first pass. They've adjusted it down for me before and they've left it alone before. In other counties (maybe you can opt for this in Denton too) you can gather examples of comparable properties that have been sold yourself and present them at an appointment with the county appraiser.
I would probably not bother contesting if the appraisal went down, but that's me.
The "improvement" value is what they deem whatever is built on the lot to be worth. The total value is that value plus the value of the land.
On preview: Also what muddgirl said.
posted by cmoj at 4:19 PM on April 15 [1 favorite]
You do not need to re-apply every year for your homestead exemption unless you move or the county appraiser sends you a form and asks you to (I've never heard of this happening).
In regard to contesting your appraisal, this works differently in different counties. In Denton county last I did it, you just notify them that you're contesting and they'll do a specific audit of your property rather than whatever excel spreadsheet they use for a first pass. They've adjusted it down for me before and they've left it alone before. In other counties (maybe you can opt for this in Denton too) you can gather examples of comparable properties that have been sold yourself and present them at an appointment with the county appraiser.
I would probably not bother contesting if the appraisal went down, but that's me.
The "improvement" value is what they deem whatever is built on the lot to be worth. The total value is that value plus the value of the land.
On preview: Also what muddgirl said.
posted by cmoj at 4:19 PM on April 15 [1 favorite]
Best answer: ”Do I need to apply for a homestead exemption every year?” The answer is, probably.
You do not need to reapply for the Texas homestead credit yearly.
The question here is how much you paid for your house in 2023. If they're appraising your house for substantially more than you paid for it last year, then of course, contest it. If they're appraising it for more than you reasonably feel you could sell it for, yes, contest it.
However, if the appraisal value is less than you recently paid for the home, and less than you feel you could sell the home for (and lower than other comparable houses in your neighborhood are selling for), while you are completely within your legal rights to contest it, it may be a counterproductive exercise.
The idea here, idealistically, is that you can contest and have the property value reviewed if the appraisal value is unfair and inaccurate.
posted by eschatfische at 4:30 PM on April 15 [1 favorite]
You do not need to reapply for the Texas homestead credit yearly.
The question here is how much you paid for your house in 2023. If they're appraising your house for substantially more than you paid for it last year, then of course, contest it. If they're appraising it for more than you reasonably feel you could sell it for, yes, contest it.
However, if the appraisal value is less than you recently paid for the home, and less than you feel you could sell the home for (and lower than other comparable houses in your neighborhood are selling for), while you are completely within your legal rights to contest it, it may be a counterproductive exercise.
The idea here, idealistically, is that you can contest and have the property value reviewed if the appraisal value is unfair and inaccurate.
posted by eschatfische at 4:30 PM on April 15 [1 favorite]
Hmm, I meant to link to this Texas Comptroller page which specifies that you don't need to reapply for the Texas homestead credit each year. (I am also a homeowner in Texas and have not had to reapply each year.)
posted by eschatfische at 4:36 PM on April 15
posted by eschatfische at 4:36 PM on April 15
Best answer: I also live in Texas.
There are specialty law firms that will contest your appraisal for you, like clockwork, every year, and you pay them a percentage of what they're able to knock off your tax bill, if that amounts to anything.
With your homestead exemption (which, as said, you only need to apply for when you move in), your property tax bill can go up no more than 10% per year, but that means that in theory, it can double in 7 years—and in a hot market, it will. (Without the exemption, the sky's the limit. I think that if you're over 65, the ramp rate is much lower.) So contesting your tax bill can be a way to avoid being priced out of your own home. Letting the professionals do it is more reliable. I did successfully contest my property taxes once, but it was time-consuming and the window is fairly short.
posted by adamrice at 4:48 PM on April 15 [3 favorites]
There are specialty law firms that will contest your appraisal for you, like clockwork, every year, and you pay them a percentage of what they're able to knock off your tax bill, if that amounts to anything.
With your homestead exemption (which, as said, you only need to apply for when you move in), your property tax bill can go up no more than 10% per year, but that means that in theory, it can double in 7 years—and in a hot market, it will. (Without the exemption, the sky's the limit. I think that if you're over 65, the ramp rate is much lower.) So contesting your tax bill can be a way to avoid being priced out of your own home. Letting the professionals do it is more reliable. I did successfully contest my property taxes once, but it was time-consuming and the window is fairly short.
posted by adamrice at 4:48 PM on April 15 [3 favorites]
Best answer: This is market dependent (especially in Texas, which I understand has no state property tax so everything is local) so perhaps I shouldn't be weighing in, but - in my limited experience, the only thing you can contest is the valuation. That is, you can say that they overvalued your place and should reassess. That's often difficult to do if you've just purchased the place and they've re-adjusted the assessed value to match what you bought it for. In my market, it's been typical in the past decade or so that homes that have been owned for a while are routinely assessed for much less than their market value, so when they're eventually sold their assessed value shoots up because it reveals that the assessed value is recalculated to be closer to the sale price. Hard to say that the tax man shouldn't value your place at 310K if you've just bought it for 310k. That said, you may want to contest future automatic increases in the assessed value, since it's based on broad averages that might not apply to your place.
You can't really contest the net (that is, if I understand you correctly, the amount that they deduct from the assessed value to determine the tax you pay), as this is a pure mathematical calculation based off the assessed value and last year's assessed value. Homestead exemption is typically a fixed amount, like a tax exemption, that is deducted from the assessed value of your home when taxes are calculation - no negotiations there. Most places also include caps on how much the taxable amount can increase from year to year. For example, when I bought my place the assessed value went up 30%, but local regulations stated they couldn't immediately increase the property tax by 30% - they had to do it by 8% or something each year until the taxed value matched the assessed value. It's hard to tell, but I'm guessing this is what the Value Limitation Adj figure you mention is doing. Anyway, that's irrelevant to any potential contestation since it's all just math - only thing you can negotiate is the assessed value of the place.
posted by exutima at 4:51 PM on April 15 [1 favorite]
You can't really contest the net (that is, if I understand you correctly, the amount that they deduct from the assessed value to determine the tax you pay), as this is a pure mathematical calculation based off the assessed value and last year's assessed value. Homestead exemption is typically a fixed amount, like a tax exemption, that is deducted from the assessed value of your home when taxes are calculation - no negotiations there. Most places also include caps on how much the taxable amount can increase from year to year. For example, when I bought my place the assessed value went up 30%, but local regulations stated they couldn't immediately increase the property tax by 30% - they had to do it by 8% or something each year until the taxed value matched the assessed value. It's hard to tell, but I'm guessing this is what the Value Limitation Adj figure you mention is doing. Anyway, that's irrelevant to any potential contestation since it's all just math - only thing you can negotiate is the assessed value of the place.
posted by exutima at 4:51 PM on April 15 [1 favorite]
I also live in Texas. A friend who also lives here (Bexar County) did in fact contest the tax assessment and was happy with the results. Memail me if you would like the name of the firm she used.
We haven't received our appraisal yet but I imagine we will be having the same conversation.
posted by tafetta, darling! at 4:58 PM on April 15 [1 favorite]
We haven't received our appraisal yet but I imagine we will be having the same conversation.
posted by tafetta, darling! at 4:58 PM on April 15 [1 favorite]
It is correct that you do not have to reapply for the homestead exemption. One and done.
If your appraised value went down I doubt they'll come down on it unless something is seriously wrong.
If it goes up in the future, it's worth contesting. They prefer evidence dated as close to January 1 as possible, so if you need any major repairs think about timing any estimates you need to get to the beginning of the year or thereafter as these can then be used to help argue your case. I have an older home and have had some success in getting them to knock the value down based on photos of things that are going haywire (for better or worse: many such cases). I submitted things online but in my county you can, maybe sometimes have to, go down to the appraisal district in person for a meeting to present your materials.
I have also used one of the companies that contest for you. I didn't feel like it was especially worth it, but I don't rule out doing it again in the future anyway just for the time saved. If you go that route they still want you to provide them with evidence, so try to keep on top of that no matter what.
Welcome to Texas homeownership, where anything you're not paying in state income taxes will be bled from you tenfold in property taxes (ask me how I know!).
posted by wormtales at 5:00 PM on April 15 [1 favorite]
If your appraised value went down I doubt they'll come down on it unless something is seriously wrong.
If it goes up in the future, it's worth contesting. They prefer evidence dated as close to January 1 as possible, so if you need any major repairs think about timing any estimates you need to get to the beginning of the year or thereafter as these can then be used to help argue your case. I have an older home and have had some success in getting them to knock the value down based on photos of things that are going haywire (for better or worse: many such cases). I submitted things online but in my county you can, maybe sometimes have to, go down to the appraisal district in person for a meeting to present your materials.
I have also used one of the companies that contest for you. I didn't feel like it was especially worth it, but I don't rule out doing it again in the future anyway just for the time saved. If you go that route they still want you to provide them with evidence, so try to keep on top of that no matter what.
Welcome to Texas homeownership, where anything you're not paying in state income taxes will be bled from you tenfold in property taxes (ask me how I know!).
posted by wormtales at 5:00 PM on April 15 [1 favorite]
Dallas resident here, owned a house in Austin and before that Houston before I lived here. In a hot market, you're definitely going to want to consider contesting the appraisal. You'll get a lot of mail from lawyers wanting to do that for you. Ask your local homeowner friends and neighbors who's good; they'll know. Alternatively ask your former real estate agent. We've gotten lots of good leads on contractors and such from the guy who helped us buy our house. Good luck!
posted by gentlyepigrams at 5:20 PM on April 15 [1 favorite]
posted by gentlyepigrams at 5:20 PM on April 15 [1 favorite]
Response by poster: All of this is extremely helpful. I still have a feeling of ambiguity about the fact that 1) the appraisal did go down but 2) the market apparently really did too, to the extent that I believe another (I think probably pretty identical) unit has been on the market for a couple of months at 20K less than I paid.
posted by less-of-course at 5:43 PM on April 15
posted by less-of-course at 5:43 PM on April 15
Considering how many Texas districts use computer-assisted mass appraisal and the changes (tax bill passed in November, discrepancies on mailer) since your purchase, you could contact your county assessor's office to check for errors and to make sure your exemption filing was approved (you should have received a notice if it wasn't, but clerical errors happen). If it comes to it, a Homeowners Protest Guide at the Texas comptroller's office explains the process; moreover, "You must file a protest by May 31 or no later than 30 days after the date on the notice of appraised value on your home. Many notices are mailed in April, so your protest should be filed earlier than May 31." Overview 1, 2.
posted by Iris Gambol at 5:51 PM on April 15 [1 favorite]
posted by Iris Gambol at 5:51 PM on April 15 [1 favorite]
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The documentation you got with this information came from somewhere - in WA it’s the County Assessor’s office. Sometimes, the websites of such offices are quite helpful, and sometimes the employees are likewise helpful.
I’d start there. Hope this helps.
posted by dbmcd at 3:59 PM on April 15 [1 favorite]