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.

There is so much information out there regarding how COVID-19 may affect your property taxes and property tax appeal. While there is some good, accurate information available, there is also quite a bit of misinformation in the marketplace. We’d like to set the record straight on what we know now and how to best proceed with your property tax appeals process, knowing that information may change in the days and weeks ahead.

MYTHS:

MYTH #1 – Property tax protests and hearings are cancelled or delayed.

While some counties may have delayed their protest deadlines, many others are moving forward with their usual timelines utilizing online protest submissions. Hearings have not been postponed yet, and we should have more information on how that process will be handled in the coming weeks. Please check the website of each county that your properties are located in to stay abreast of specific deadlines and procedures.

MYTH #2 – Property tax payments are suspended. Property tax rates will be adjusted.

We currently don’t know whether payments will be suspended or if property tax rates will be adjusted. This is still undetermined, so it’s important to move forward with your usual property tax process. Once relief efforts are confirmed, expect to hear from our team with updates.

MYTH #3 – There’s no need to file your property tax protest, because property taxes are going to be waived amid COVID-19.

At the present time, relief efforts are being assessed, but haven’t been confirmed, so it’s important to proceed as usual with your property tax protest. Any relief measures will certainly be welcomed, but if you miss the opportunity to protest, you are taking an unnecessary gamble that can impact your bottom line. 

MYTH #4 – Next year’s property taxes will be lower because revenue has been down amid COVID-19.

It’s important to remember that the property tax assessments you will be receiving are for tax year 2020 and they are by tax code based on a valuation that existed on January 1, 2020. As such, there is a strong chance many tax notices you receive will not take into account the impacts of COVID-19. Those likely will not be seen until 2021 and reflected in your property tax payments that are due January 2022. Even more of a reason to protest your 2020 assessment in the coming weeks and lower the amount you will need to pay this coming January as you recover from COVID-19. 

TRUTHS:

TRUTH #1 – COVID-19 has impacted the way some Texas counties are handling property taxes and the property tax appeals process.

Many counties have changed their deadlines and are actively finding ways to ensure your protests are handled with the current restrictions in place. Be sure to check the website for the individual counties that your properties are located in for updates on how they are moving forward.

TRUTH #2 – Filing a property tax protest is more important than ever.

Property values across Texas have skyrocketed in recent years and that trend continues to climb. This reality accompanied by the financial challenges that many business owners and investors anticipate amid COVID-19, reinforce the importance of your property tax appeal. There is no room for unnecessary, increased property tax payments in a business climate such as this.   

TRUTH #3 – There are relief measures being discussed at the state and local levels, but nothing is set in stone yet.

There is much being discussed by city and state leaders, though nothing is final. It’s important to move forward with your property tax appeal to ensure that you are protected with or without whatever relief may be granted in the coming weeks and months.  

This is a steadily evolving situation and the Patel Gaines team will continue to monitor the property tax environment closely. Should you have questions about how to move forward, our team is happy be your personal property tax resource as we navigate through this unusual time. Give us a call at 210.460.7787!

This content is provided for informational purposes only and is in no way intended to constitute legal advice or create an attorney-client relationship.

Texas property owners pay some of the highest taxes in the country, and that’s not likely to change soon. One reason is how the state revalues property for tax levies.
Annual appraisals tend to push the value of properties, and property taxes, higher, even if the actual tax rate does not change. Local governments are not inclined to reduce the tax rate because they need more revenue to support the state’s economic and population growth which leads to more schools, road expansions and other infrastructure growth.
It’s a flawed system that pushes the cost of living and doing business in the state higher and leaves many property owners with few alternatives other than litigation to try to keep those costs under control, says Rahul Patel of Patel|Gaines, one of the state’s leading property tax attorneys.