Each county’s appraisal district determines the value of all taxable property within the county. Before the appraisals begin, the district compiles a list of taxable property. The listing for each property contains a description and the name and address of the owner.
The appraised home value for a homeowner who qualifies his or her homestead for exemptions in the preceding and current year may not increase more than 10 percent per year.
Property Tax Code Section 23.23(a) sets a limit on the appraised value of a residence homestead, stating that its appraised value for a tax year may not exceed the lesser of: (1) the market value of the property; or (2) the sum of: (A) 10 percent of the appraised value of the property for last year; (B) the appraised value of the property for last year; and (C) the market value of all new improvements to the property, excluding a replacement structure for one that was rendered uninhabitable or unusable by a casualty or by mold or water damage. The appraisal limitation first applies in the year after the homeowner qualifies for the homestead exemption.
How is your property valued?
The appraisal district must repeat its appraisal process for property at least once every three years.
To save time and money, the appraisal district uses mass appraisal to appraise large numbers of properties. In a mass appraisal, the district first collects detailed descriptions of each taxable property in the district. It then classifies properties according to a variety of factors, such as size, use and construction type. Using data from recent property sales, the district appraises the value of typical properties in each class. Taking into account differences such as age or location, the district uses “typical” property values to appraise all the properties in each class.
The appraisal district may use three common methods to value property: the market, income and cost approaches.
The market approach is most often used and simply asks, “What are properties similar to this property selling for?” The value of your home is an estimate of the price your home would sell for on January 1. The appraisal district compares your home to similar homes that have sold recently and determines your home’s value.
Other methods are used to appraise types of properties that don’t often sell, such as utility companies and oil leases. The income approach asks, “What would an investor pay in anticipation of future income from the property?” The cost approach asks, “How much would it cost to replace the property with one of equal utility?”
Agricultural & Timberland Appraisal
The comptroller’s office gathers data to develop agricultural productivity values for the property value study. A major source of information for the Property Tax Assistance Division is the annual Farm and Ranch Survey.
How may landowners qualify for special use appraisal?
Landowners can apply for two types of special appraisals – appraisal based on productivity value and appraisal based on restrictions to use of land as public access property or recreation, park or scenic land.
Productivity value is based on land’s ability to produce agricultural or timber products and is usually lower than market value. Additional information is available in the Manual for the Appraisal of Agricultural Lands and the Manual for the Appraisal of Timberland.
Land that is used to manage wildlife may also qualify for special use appraisal. See the Guidelines for Qualification of Agricultural Land in Wildlife Management Use for additional information. The required management plan and other useful information are available from the Texas Parks and Wildlife Department.
Requirements for lands restricted to public airport or recreational, park and scenic lands vary. Additional information is available in these documents: Guidelines for the Appraisal of Public Access Airport Property and Guidelines for the Appraisal of Recreational, Park and Scenic Land.
What land qualifies for agricultural appraisal?
Property owners may qualify for agricultural appraisal if land meets the following criteria:
- The land must be devoted principally to agricultural use. Agricultural use includes producing crops, livestock, poultry, fish, or cover crops. It also can include leaving the land idle for a government program or for normal crop of livestock rotation. Land used for raising certain exotic animals (including exotic birds) to produce human food or other items of commercial value qualifies. Cutting wood for use in fences or structures on adjacent agricultural land also qualifies.
- Using land for wildlife management is an agricultural use, if such land was previously qualified open-space land and is actively used for wildlife management. Wildlife management land must be used in at least three of seven specific ways to propagate a breeding population of wild animals for human use.
- Agricultural land must be devoted to production at a level of intensity that is common in the local area.
- The land must have been devoted to agricultural or timer production for at least five of the past seven years. However, land within the city limits must have been devoted continuously for the preceding five years, unless the land did not receive substantially equal city services as other properties in the city.
What happens if land receiving an agricultural appraisal changes to a non-agricultural use?
If land receiving an agricultural appraisal changes to a non-agricultural use, the property owner who changes the use will owe a rollback tax. The rollback tax is due for each of the previous three years in which the land got the lower appraisal. The rollback tax is the difference between the taxes paid on the land’s agricultural value and the taxes paid if the land had been taxed on its higher market value. Plus, the owner pays 7 percent interest for each year from the date that the taxes would have been due. For example, the third year of rollback tax bill may include as much as 21 percent interest, depending on the date the use changed.
What if your property value rises?
A notice of appraised value tells you if the appraisal district intends to increase the value of your property.
Chief appraisers send notices of appraised value. A detailed notice contains a description of your property, its value, the exemptions and an estimate of taxes that might be owed.
The chief appraiser must send you the notice of appraised value by May 1 or April 1 for residences, or as soon thereafter as possible. If you disagree with this value, you have until May 31 or 30 days from the date the notice was mailed (whichever is later) to file a protest with the ARB.
The notice of appraised value explains how and when you can file a protest with the ARB if you disagree with the district’s actions, and will include a protest form.
What is a rendition?
A rendition is a form you may use to report the taxable property you own on January 1 to your appraisal district. You may render both real and personal property. The rendition identifies, describes and gives the location of your taxable property.
Business owners must report a rendition of their personal property. Other property owners may submit a rendition if they choose.
Persons filing renditions who are not the property owner, owner’s employee or owner’s affiliated entity must have the rendition notarized.
If the total taxable value of your personal property is less than $2,000 in any one taxing unit, the property is exempt in that taxing unit.
- Advantages: If you file a rendition, you are in a better position to exercise your rights as a taxpayer.
- Your correct mailing address is established on record so taxing units will send your tax bills to the right address.
- Your opinion of your property’s value is on record with the appraisal district. The chief appraiser must send you a notice of appraised value if he or she places a higher value on your property than the value you listed on your rendition.
- Deadline: File your rendition with the appraisal district after January 1 and no later than April 15.
- You may apply, in writing, for a mandatory extension to May 15. The chief appraiser may extend the deadline another 15 days beyond May 1 if you can show good cause for needing an extension.
- Requirements: If you own tangible personal property that is used to produce income, you must report this property on a rendition form every year.