Texas’ New Property Tax Laws take a Step in the Right Direction
Kathlyn Hufstetler, Senior Associate Attorney, Patel Gaines, PLLC overseeing the Houston office, specializing in commercial property tax litigation
Property tax reform has been a contentious issue in Texas for decades and with new legislation officially in effect, it will continue to be.
As one of the largest business expense items, property taxes are always a hot topic, but more so now as businesses continue to brave the financial challenges amid COVID-19. Even before companies faced such widespread hardship, Texas’ rapid growth, new development and gentrification had made property taxes more burdensome than ever before.
While most of these new laws went into effect as early as September 2019, we’re beginning to see the impact they will have on business owners.
For those not familiar with the changes that were made, several important things happened when these new laws went into effect. The two to note include: the property tax process became much more transparent than it ever had been in the past and it also became more regulated, with checks and balances to keep everything running optimally.
In the age of corporate transparency, it’s about time we see that same transparency reflected in the property tax system.
We’re seeing more information readily available and accessible to the public, including all tax rates posted to county websites. It’s also been mandated that property tax rate increases are to be capped at 3.5% and any increase above that must be publicly announced and voted on by the general public during November elections.
The second change has to do with a smoother management of the property tax and protest process. Changes include mandated training for ARB members, a review of each appraisal district’s operations by the comptroller’s office every two years and rules that prevent conflicts of interest among appraisal district board members. The board also can no longer raise a taxable property value on a property owner who has come in for a hearing, thereby preventing any sort of retaliation.
Finally, one of the most interesting checks and balances put in place was that of tasking the comptroller with developing a property tax manual that outlines rules and procedures of the property tax and protest system.
While these amendments to our current property tax laws are welcomed and represent a step in the right direction, there is still much more than can be done. This isn’t the all-encompassing answer to property tax legislation; we definitely have work to do to get the system where it needs to be for business owners and homeowners.
The new tax laws provide some much needed relief, but the concerns are still there as steadily rising property values are raising property taxes. And while homeowners will see the benefits of the property tax cap, it’s important to note that this cap does not apply to commercial real estate and business owners.
To those navigating the new system: contact a property tax consultant. They can help you protest your taxes and also explain the process and how to plan accordingly. For commercial real estate owners, the property tax protest process is more important than ever. Every $100,000 in property value savings translates to about $2,500 in real savings. A property tax consultant, or a law firm in the case of larger commercial real estate property, could make a huge difference for your bottom line.
Take advantage of these changes put in place to help property owners in our state.
This content is provided for informational purposes only and is in no way intended to constitute legal advice or create an attorney-client relationship.