What newcomers need to know about Houston area property taxes

Original article published in the Houston Chronicle: “On the Move”

Houston Property Taxes

Jeremy Fain

Houston property taxes

Pat O’Connor

Although most people are probably thinking about their income taxes this weekend, it’s also a good time to be thinking about property taxes, as the deadline for filing a protest is May 15.

This is an important topic for people who are moving to Houston, because they often experience a bit of sticker shock when they learn about our property tax rates, which can be substantially higher than in other parts of the country.

Also, newcomers are often unaware that there are specific actions that they can and should take to potentially reduce their property taxes, including the right to protest.

Pat O’Connor is president of O’Connor, which is a property tax consulting firm that appeals property taxes for homeowners. He said that newcomers don’t often realize that they have the right to protest their property taxes, and that they can do so on an annual basis.

“Our experience is that people who protest for five consecutive years will probably be able to get their property value down to about 90 percent of market value,” O’Connor explained.  “So, it can make a difference when people appeal in consecutive years.”

Property taxes in the Houston area are based on a property’s appraised value as determined by the appraisal district where the home is located.  For example, HCAD determines the property values for homes located in Harris County.

The Texas Property Tax Code contains statutes regulating the assessment, taxation, exemptions, appeal options and hearing procedures for property tax appeals.  But, even though the process for protesting is well-defined, it can be intimidating for some homeowners.

“Some people find the process of working with the appraisal district to be particularly frustrating, because they don’t understand the process. So, the benefit that we really bring to property owners is that we suit up and show up every year.  We file a protest for our clients on both market value and unequal appraisal, and we get the client a reduction about 60 percent of the time,” O’Connor said.

O’Connor works on a contingency basis, meaning that they are only compensated if they are successful in getting a reduction in the appraised value of the property for their clients.  When successful, O’Connor’s fee is equal to half of the homeowner’s tax savings.

Another way that homeowners can save money on their property taxes in Texas, is by filing for a homestead exemption, which removes part of the value of the property from taxation.

In Harris County, a homestead exemption could reduce the value of a property by 20 percent. That means that a homeowner would only pay taxes based on 80 percent of the property’s value.

This is something that Jeremy Fain, a Realtor with Greenwood King Properties recommends to all of his clients.

“At the beginning of each year, I send out a big packet to everyone that I sold a house to within the last year, so that they will have everything that they need in order to file for their homestead exemption,” said Fain.

He added, “Even though my clients are getting their homestead exemption discounts on the assessed value of the property, many home values in Houston have gone up, and a lot of values are higher than what people paid for their homes.  So, I always talk to my clients about protesting their property taxes.”

Fain can also help in preparing information and providing statistical data that homesowners need for protesting their property taxes.  He said that he has even protested property taxes on behalf of some of his clients.

One thing that Fain said that homebuyers often forget, is to budget for their property taxes, which are prorated at the time of closing.

“The seller gives the buyer a credit for their portion of the property taxes from the beginning of the year through the date of closing.  This is shown on the Settlement Statement, but I always remind the buyers that when the tax bill comes in, that they are responsible for that full bill,” Fain said.

O’Connor said that it is also important to point out that there are property valuation issues that are impacting homeowners who suffered flood damage or loss from Hurricane Harvey.  He said that most appraisal districts along the Gulf Coast (HCAD is a known exception), are not attempting to identify properties that flooded.  Instead, they are relying on property owners to self-report.

“The problem is that most people who flooded are not really focused on their property taxes.  Some of them are still in a state of shock, so making sure that they are notifying the appraisal district about the change in their property condition is not a high priority for them,” said O’Connor.

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