Manvel, TX · Member since 2014 · 309 posts · 127 votes
I'm looking at a property that would cost about $75K and needs about $30K of repairs for an ARV of $125K. The tax rate is about 2.9%. Most recent tax appraisal is $92K. Year 1, I should be able to appeal based on the purchase price and bump the appraisal down to $75K.
But, how should I look at the following years? Year 2, I'm not sure if they'll bump the appraisal up by 10% or if they will bump it on up at least to where it was, if not nearer to the ARV.
And how about after that? I've heard that investment properties aren't capped at 10% increase per year like owner-occupied homes are. When you are analyzing a deal, how much increase in property taxes do you calculate in for each year?
What a great question, especially in Texas where property taxes are a major expense (I know, everyone thinks they are high and its all relative.
I would figure if you get the taxes lowered due to condition, they will be watching to raise them when you complete the rehab. We have been told to expect that in several locales. As to future, Texas A&M has some great resources for Texas investors at
What a great question, especially in Texas where property taxes are a major expense (I know, everyone thinks they are high and its all relative.
I would figure if you get the taxes lowered due to condition, they will be watching to raise them when you complete the rehab. We have been told to expect that in several locales. As to future, Texas A&M has some great resources for Texas investors at
Property values for this year are already set so 92K will be the value for 2015
Property values are based on the condition of the property on Jan 1 so if you bought now and renovated prior to Jan 1 2016 you could very well be valued on the improved value. Some counties re-access every year and some don't so there could be a chance to reduce. You will most likely get a letter asking what you paid for the property so return it will a copy of your settlement statement as it couldn't hurt ! If you protect next year, you need to do so prior to May 31st .
You are correct that non-homestead properties are not capped in any way as fas as an increase goes
Investor · Fort Worth, TX · Member since 2013 · 309 posts · 150 votes
11y
You could file a late protest of the value, if it was 1/3 less than the appraisal value (tax code 25.25(d)). The appraisal districts are required to assess each property at least once every three years. This doesn't mean they won't assess it every year, but if they don't do it annually; they will reassess the values soon enough.
Also, if your property is not your homestead; the appraisal districts do not have a cap on the increase in the value of your property from one year to the next. What really is a pain is that the burden of proof is on you to prove the value isn't what they have assessed. So even if you do file a protest, it could go right back to that value the next year or a higher value.
What no one is telling you is there is no way to judge tax rates from one year to the next since the tax rates are not actually set by a taxing unit until September 30th, and bills are set to be issued the next day. And that the total assessments for a taxing unit affect those tax rates that property owners are billed. So even if your values decrease, your taxes may still increase.
Working in a tax office, I can tell you, that house you are looking at could very well end up costing more in taxes at 75k next year than it does at 92k this year. Unless the ownership conditions are the same (not owner occupied), and there are not any other exemptions on the property like disabled veteran.