What's the deal with property taxes?

In In this blog, I will be connecting you with the knowledge you need to know about property taxes.

Did you know that the tax invoices will be coming out the first of October?.  If you have a mortgage and an escrow account, the mortgage company will get a copy of this bill and will handle paying your taxes, however you need to make sure you understand the invoice.  Many people don’t even look at their bill, or just scan it because they know the mortgage company will pay it.  However, surprise-surprise-their payments go up because their taxes were more than expected and the mortgage company has to increase the amount they collect and hold in escrow to pay these taxes.  So it is really important you look at the bill and understand it.

Over the next few weeks, I’ll break down the basics you need to know if you own property. This topic can be confusing if you have owned property or if you have recently purchased property, or even if you are considering buying property.

As a realtor, I am often surprised by different aspects of the tax process.  The valuation, the CAD (County Appraisal District), the exemptions, the payments, all of it.  It can be confusing, but what surprises me most is that the general public has very little knowledge of it and the appraisal district and taxing entities can sometimes be less than forthcoming about helping them understand it.  That isn’t necessarily an accusation against these entities, they just do their job and throw all kinds of information out there, trusting people will understand. 

That is why I am doing this series.

This will not be super in-depth series, but will give you an overview of the basics you need to know.  You can get more answers if you need them, on your appraisal district websites, or just give me a call and I would be glad to help you find your answers.
Let’s get started.

in the spring of every year, the appraisal districts send out the Notice of Appraised Value.  If you have purchased your home or land sometime during the same year, you probably did not receive this notice, so your first notification of the value may actually be the tax invoice you receive. 

This document is a result of 2 things:

1. an evaluation the appraisers have made of your property, which is really their idea of the worth of your property.
2. the most recent tax rates provided by the various entities such as city, school, county, state, and a few other entities like water district, or hospital district.

 
First, let’s talk about value.

Did you know that sometimes the appraisers come to your property to look at it?  If you didn’t, it means that you probably weren’t there.  This is more common in more rural counties, however counties in metropolitan areas will do the same.

We built our home, a pay as you go type deal, and when we first bought our property, our value was land only…because we had no improvements.  Then the following year, we put up the metal  building, it was just the shell of our future barndominium, without any finishes in it.  That year we received a huge tax bill because the appraisal district had come by, seen the building and given it full value, as if it were completely finished on the inside.  I called and found out it could be contested because it wasn’t finished.  I sent them photos of the inside along with my protest.  They then gave the value a percentage, based on the percentage of completion.

Every year after, they came by or called to see how much farther along we were and increased the percentage.  After 2-3 years, literally the week we could call it complete, an appraiser showed up unannounced and asked to see the inside.  I showed them the home and they valued it at 100% complete. Later we added a carport and the following year, that showed up on our tax bill.  This could have only been known by the appraisers if they had physically ‘seen’ it.

So don’t be surprised if they ‘pop’ by, or if you see a car in your driveway taking pictures.  Obviously you want to make sure who it is, but this is a common practice in some areas.

The value the CAD gives is based on a number of factors and is not traditionally ‘fair market value’, but recently in some areas where the real estate market is active, they have moved closer to market value.  The actual breakdown of how they determine that value is provided on the various CAD websites.

The second factor shown on the notice is the tax rate.  This is the rate that each entity has determine the property owners should be charged.  The monies collected for these entities, goes to provide services for each entity such as schools, roads, police and fire, city buildings, etc.  Again, each entity votes on these rates and use the expected income to plan future infrastructure.

Finally, there is a section on this document that breaks down the value of each piece of the appraisal; the land and any improvements.  These are given ‘value’ then any exemptions you may have will be shown.  Exemptions are ‘discounts’ as it were based on a variety of factors. 

There are exemptions for homestead, disabled veterans, over 65, agricultural, non-profit, etc. I’ll get into the exemptions in a bit more detail in another video, but if you live on the property, you should have a homestead exemption.  When you buy your home, some title companies will provide the form to be filed, but not always, so make sure you have a homestead exemption.  It can save you money.  For a complete list of exemptions, you can go to your County or Central Appraisal District Website.

In the spring, when the Notice of Appraised Value is sent out, on the back is a list of many of the exemptions you can file for.  They also send out a form to dispute your value, called ‘Notice of Protest.’  When the values come out, many realtors commonly help their clients and others  determine if they have a cause for protest.  Again, I will do a video on how to file a protest in this series.

Stay tuned for more articles on your property taxes!

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