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Property Taxes – Art or Science? Real Estate College Station, TX

In the state of Texas, the value of real property is appraised each year by a county appraisal district, and this appraisal becomes the basis for the tax liability of property owners. After property owners review the assessment, those who disagree with the appraisal can ask for remedies provided by the Property Tax Code which allows adjustments based on two issues: determination of fair market value or fair and equal treatment.

Excessive Appraisal of Real Property Value

When owners contest the county’s appraisal of their property (and consequently their tax liability), the matter is brought to court, and experts are called in to give their own appraisal of what the value of the property should be. Basically these appraisals must follow legal requirements meant to set the parameters for property value in a competitive and open market transaction. Simply put, there are some guidelines for establishing what the property would fetch if sold. These guidelines, however, are not mathematical algorithms; thus, regardless of the participation of experts, property appraisal remains a highly interpretative procedure. The final appraisal of property value is ultimately up to the court which can choose the appraisal closest to the requirements of the Property Tax Code, or choose a value different from what the experts suggest.

Unequal Appraisal of Real Property Value

Owners may challenge the assessed value of their property if they can provide evidence on one of three conditions:

  1. The appraisal exceeds by 10 percent the median value of a reasonable representative sample of properties in the district
  2. The appraisal exceeds by 10 percent the median value of a reasonable representative sample of similar or similarly situated properties
  3. The appraisal exceeds by 10 percent the median value of a reasonable number of similar properties that have been appropriately adjusted.

Take note that these three conditions make no clear definition of how many properties should make a representative sample. The first two conditions would theoretically take an enormous amount of resources to fulfill. Consequently, the third condition is the most often used avenue for consideration, and it has proved useful for a good number of property owners.

Excessive Appraisal versus Unequal Appraisal

The Texas Constitution provides for the appraisal of real property to reflect both market value and equal and uniform taxation. In cases where a property is given an appraisal higher than that of similar properties in the country, the court may choose to lower the appraisal even when there was a higher county appraisal, based on constitutional criteria of market value. The court has ruled that when there is a discrepancy between taxation at market value on one hand, and equal and uniform taxation on the other, equal and uniform taxation should prevail.

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