Glossary

 

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Ad Valorem Tax

Tax based upon value.

Appeal

The appraisal review board conducts property tax protest hearings for appeals not resolved at the informal hearing. In most counties, ARB hearings are conducted by three-member panels to prepare a recommendation for the full appraisal review board.

Appraisal

Occurs when the market value for a property exceeds the market value established by the appraisal district for comparable properties after making reasonable adjustments. Unequal appraisal sometimes occurs when properties are selectively reappraised following their acquisition. In other cases it occurs because the appraisal district has inaccurate data for a property or submarket. It can also occur when the appraisal district reappraises the market value for only a portion of properties in an area. Property owners can appeal both market value and unequal appraisal annually in Texas.

Business Personal Property

Tangible personal property used for the production of income. Business personal property is taxable at the same tax rate as real property in Texas. Examples of business personal property include inventory, office equipment, office furniture, heavy equipment, trucks and cars.

Central Appraisal District (CAD)

An organization that compiles an inventory of property within the county and values it periodically using mass appraisal. Types of property listed include real property, business personal property and minerals.

Chief Appraiser

Chief Administrative Officer of a central appraisal district.

Homestead Cap

A limitation on the increase in assessed value but not market value for homesteads. This limitation applies only to homesteads and not to second residences, homes owned for investment or any other type of real property, personal property or minerals. The limitation is 10% per year, times the number of years as the property was last reappraised, plus the market value of improvements added since the property was last appraised. Improvements do not include maintenance.

Homestead Exemption

A partial exemption of property taxes in Texas for owners of a residence. Qualifications include owning the house on January 1 and living in the house on January 1 of the tax year in question.

Informal Hearing

The first step of the property tax protest process. The administrative hearings collectively include the informal hearing and an appraisal review board hearing. During the informal hearing, the property owner or property tax consultant meets with an appraiser employed by the central appraisal district. The owner/consultant and the appraiser trade information and attempt to negotiate a settlement. If the informal hearing results in an agreement, there is no appraisal review board hearing for the property and the assessed value is final for the year.

Market Value

The amount of money, in US dollars, which could be obtained for property exposed to the market for a reasonable period of time, where both parties are knowledgeable regarding all possible uses and defects with the property and neither party is under duress to consummate a transaction.

Mass Appraisal

A process used to value real estate when it is not possible to perform an individual appraisal for each property. The process usually involves compiling data regarding the physical characteristics of the property and market data such as rental rates, vacancy rates, expense rates, other income, capitalization rates, cost data and comparable sales data. Valuations are calculated using data for each subject property with the market data. Statistical processes including regression analysis are performed to develop an estimate of value for each property. This is the process typically used by appraisal districts in Texas to estimate the market value for real estate.

Personal Property

Property which is tangible yet is not real property. In Texas, the typical basis for differentiating between real property and personal property is whether it is attached to the real property. For example, a refrigerator is not typically considered attached to real estate. However, a light fixture, plumbing fixture, carpet or vinyl tile would typically be considered attach to the real estate. Examples of personal property include automobiles, boats, guns, clothes, household items, tools, office supplies, office furniture, office equipment and inventory. Personal property used for the production of income is taxable in Texas, at the same tax rate applied to real estate. Personal property not used in the production of income is not taxable in Texas.

Property Tax

The tax calculated by multiplying the appraised value times the tax rate for a tax entity. The appraised value may be different from the market value if the item is partially or totally exempt or subject to a homestead cap.

Property Tax Consultant

One who represents property owners in property tax matters, generally regarding market value disputes. Other services performed by tax consultants include renditions of business personal property, exemptions and combining or separating tax accounts.

Property Tax Valuation Date

January 1 is the relevant date for valuing property for property tax purposes in most circumstances. This is meaningful if a property suffers either physical or economic damage just before or just after January 1.

Protest Deadline

May 15 is the typical deadline for filing a property tax appeal in Texas. However, the deadline is technically the later of May 15 or 30 days after the appraisal district mails a notice of appraised value. (It is 30 days after the date the appraisal districts mails the notice of appraised value. It is not 30 days after the property owner receives the notice.) If the property tax protest deadline falls upon a holiday or weekend, the deadline is extended until the following workday. Property tax protests are considered timely filed if mailed by first-class mail deposited in the mail on the deadline day.

Real Estate

Land, improvements to the land (buildings), a mine or quarry, minerals, standing timber and any estate or interest in the previously mentioned property.

Subject Property

The real estate, business personal property or mineral interests being valued or reviewed for over market value or unequal appraisal.

Taxing Entity

A city, county, school district, hospital district or any other political unit of the state authorized to impose property taxes.

Tax Protest

Occurs when the market value for a property exceeds the market value established by the appraisal district for comparable properties after making reasonable adjustments. Unequal appraisal sometimes occurs when properties are selectively reappraised following their acquisition. In other cases it occurs because the appraisal district has inaccurate data for a property or submarket. It can also occur when the appraisal district reappraises the market value for only a portion of properties in an area. Property owners can appeal both market value and unequal appraisal annually in Texas.

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