How We Saved $1,454 on Our Property Taxes, Part 1

12 Aug

Earlier this year, Corey successfully protested the valuation of our investment properties – this series shares his experiences and lessons learned along the way. The information below is definitely Texas-specific, and possibly county-specific, so please take caution when applying it to your local area.

A Rising Tide Floats all Boats – And Taxes
The official “Notice of Appraised Value” is sent by the Texas County Appraisal District (TCAD) in April or May of each year. You’ll only receive a mailed notice if the valuation has increased, but you have the right to protest regardless.

Pro Tip: keep your “owner address” updated with TCAD to ensure you receive these notices. You can verify the address on file and find
address correction forms at the appraisal district’s website.

This year, both of our duplexes were slated for significant increases:

Property 2013
2014
(Proposed)
Change
Estimated
Taxes
Duplex #1 $173,740 $216,948 +25% $5,187
Duplex #2 $131,569 $161,105 +22% $4,784

With the local real estate market heating up, we weren’t surprised to see an increase – but a hike that steep warranted a closer look.

Always Challenge Your Tax Appraisal
Too often, homeowners are intimidated or don’t want the hassle of disputing their tax valuation. In truth, we get complacent because most of us don’t feel the sting of writing a giant tax check once a year (that’s intentional by the way – hiding the total cost by using “3 easy payments” is an age old marketing trick).

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(photo by rxb)

Knowing what we know now – we could easily make that the argument that you should protest your valuation every year, regardless of the amount.

Reasons include:

  • You won’t know what the appraisal district is basing your valuation on until you begin the protest process and request the supporting documentation. Like us, you may find they used an inappropriate comparable or based their analysis on inaccurate data. At the very least, make sure the comps check out and then decide whether to proceed from there.
  • Consider the immense scope of an appraisal district’s responsibility. Hundreds of thousands of properties with unique qualities are being assessed annually – best case there is a considerable opportunity for honest mistakes. Like many instances in real estate investing (and life) – nobody is going to look out for your best interest like you will.
  • Texas has no state income tax, and a heavy reliance on property and sales tax revenue. Our notice even tried to compare the 2009 valuation (the height of our area’s bubble) to the proposed 2014 value in an attempt to distract from the significant year-over-year increases. Make no mistake – they have a duty to be fair, but they also really want your money.
  • Give some thought to the potential ROI of your time – Corey’s 2-3 hours of work netted him the equivalent of $485-$727 an hour of after-tax income.
  • Now assume that $1,454 is applied as a pre-payment on our mortgage – we’d save another $2945 in unpaid interest for a total savings of $4,399. This bumps up the ROI to $1,466-$2,200 an hour of after-tax income.

Just remember: there’s a significant potential for savings, you only get what you ask for, and they’re not going to penalize you for trying. 🙂

Coming Soon: Filing your protest, early strategy, and documentation requests.

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5 Responses to “How We Saved $1,454 on Our Property Taxes, Part 1”

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  1. How We Saved $1,454 on Our Property Taxes, Part 2 | Rental Realities - September 22, 2014

    […] 1 – File a Notice to Protest After reviewing our tax appraisal notice, we needed to schedule a hearing with the Appraisal Review Board. Form 50-132 requested owner […]

  2. How We Saved $1,454 on Our Property Taxes, Part 3 | Rental Realities - October 8, 2014

    […] Corey received our appraised value and filed our notice to protest, it was time to compile any value-supporting data. Below are some […]

  3. How We Saved $1,454 on Our Property Taxes, Part 4 | Rental Realities - November 24, 2014

    […] final chapter of our appraisal protest series. Previous posts include: Receiving Our Notice of Appraised Value, Filing a Notice to Appeal and Requesting Supporting Documentation, and Compiling the […]

  4. Hiring a Property Tax Consultant | Rental Realities - May 28, 2015

    […] Received Appraisal Notice, Reasons to Protest […]

  5. Monday Mixed Bag – Flooding, Protests, and Prospecting - August 10, 2015

    […] Appraisal Protest Results After last year’s unbridled success, Corey tried his hand at protesting our tax appraisals again. The proposed year-over-year increases […]

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