Property Tax Protest and Appeals
The market value remedy may require a district court to determine if the appraised value on the appraisal district’s roll exceeds the value required by law. The court must decide if the appraisal district missed the mark in estimating property value. Typically, this determination involves teams of dueling experts with each team producing and defending an appraisal of the subject property while criticizing the judgments and conclusions of other experts.
This kind of confrontation occurs owing to the subjective aspects of deciding “market value". Definitions of market value ultimately require an estimated value that complies with legal requirements. Official formulations contain specifications of characteristics a transaction must meet to be considered evidence of market value. Those requirements roughly distill to an amount reflecting the probable price a property would command in an open and competitive market transaction.
Appraisal at all levels calls for circumstances often at variance with actual conditions observed in contemporary economies. Client’s intended use, principals’ motivations, number of competitors and a myriad of other circumstances can impact observed market transactions. All of these factors drive modern appraisal applications. These complicating factors guarantee that no single hard-and-fast formula can reliably produce a credible estimate of market value.
The Texas Constitution calls for equal and uniform treatment of property owners. That provision prohibits discriminatory practices in assessing taxes. For example, suppose an assessor appraises sold properties at or near their sales price while leaving other properties’ taxable values unchanged. Over time, disparities created by this practice would result in significantly different tax liabilities for similar properties.
The equal and uniform provision allows property owners to protest or appeal when their properties have been appraised by a different standard than other properties. That means that even if the appraisal district value does not exceed market value, an owner can seek relief if the property was treated differently from other properties in the tax base.
The district court must grant relief when presented with evidence proving that a subject property was appraised unequally.
The Property Tax Code specifies the following as evidence of such appraisals:
• the appraisal ratio of the property exceeds by at least 10 percent the median level of appraisal of a reasonable and
representative sample of other properties in the appraisal district
• the appraisal ratio of the property exceeds by at least 10 percent the median level of appraisal of a sample of properties
in the appraisal district consisting of a reasonable number of other properties similarly situated to, or of the
same general kind or character as, the property subject to the appeal; or
• the appraised value of the property exceeds the median appraised value of a reasonable number of comparable
properties appropriately adjusted.