Help my property taxes went up 52%

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Help my property taxes went up 52%

Account Closed
Specialist · San Antonio, TX · Member since 2012 · 865 posts · 351 votes

I bought a single family home last year in San Antonio Texas for approximately 105k the only thing I did to it was paint it inside and out plus clean the carpets. The tax appraisal for 2015 was $142,430. Now I get a letter in the mail that the tax appraisal  for 2016 is $192,430.00 . I have the property leased and the higher tax value would eat up the cash flow. To raise the tax rate  to above full retail seems like legalized thievery.  I need help knowing how to handle this.

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John Chapman
Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
10y

Yeah, @Jay Hinrichs pretty much hits the nail on the head.  I've been landlording for eight years now, and every year I toy with the idea of just liquidating it all and going somewhere with lower taxes. Rents have, fortunately, gone up enough here to at least cover the increases, and we've had a nice run up in appreciation, but neither can go on forever.  I literally cannot fathom how people can call Texas (or at least DFW) a "cash flow" market.  Our cap ex and taxes make it more like a "break even" market.

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  • Rod Desinord
    Real Estate Agent · Pompano Beach, FL · Member since 2015 · 249 posts · 73 votes
    10y

    SELL!!!!!!

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  • Account Closed
    OP
    Specialist · San Antonio, TX · Member since 2012 · 865 posts · 351 votes
    10y

    I messed up on the percent increase it should read 35.% increase, but that is still a lot.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    Appeal your assessment.  

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  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    10y

    Yes, appeal the assessment, especially if neighboring houses are assessed much lower. The letter should say something about appealing it now or at a set time period they give.

    And I don't know if you can do this in every state, but I appeal on each property I purchase within 90 days of closing. Sometimes I get a "no", other times I get a nice surprise. 

    1Reply
  • Robert Melcher
    Residential Real Estate Broker · San Antonio, TX · Member since 2016 · 506 posts · 311 votes
    10y

    My properties in Dallas did the same.

    $2500 a year increase on ONE property.

    Rents are also up, but the lease doesn't renew for another year, so no cash on this one for a year.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Account Closed  for all those reasons I think Texas is a state one must be very cautious about buying rentals.  I have heard this same story for going on 25 years.. and its why I have never bought rentals there. and never would personally... taxing authority is just so tough. I know on our fix and flips just owing  these things 6 months is uber painful  LOL and it also keeps values from rising as much as other areas that would have the same great basic economic drivers Texas enjoys.

    To me Texas to make money is a quick flip state but that's just me what do I know

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  • Leland Barrow
    Investor · San Marcos, TX · Member since 2015 · 272 posts · 360 votes
    10y
    Appeal, sell, or wait for market rent to adjust. If market rent is not keeping pace with tax increases then sell when you hit break even. It is not a bad thing unless you wanted to hold the property indefinitely. Texas is not a market where you can set rent and forget it. Also realize that market rents will adjust in reaction to this but there will be lag. Property taxes have gone up in multiple markets in Texas. Renters will end up paying the increases you just have to deal with lag. Let the property go month to month and raise rents when they start adjusting in your area. Regardless you should file an appeal if you can get good comps.
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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Leland Barrow  however those that sells rentals there probably gloss over these details LOL

    I can't tell you how many investors I have talked to over the years .. that wish they never bought rentals there.. if its not tax's its the foundation going wonky 

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  • Tiffanee Johnson
    Rental Property Investor · Atlanta, GA · Member since 2016 · 23 posts · 10 votes
    10y
    I'm with Nicole W. And Russell Brazil you need to appeal. I have not gone through this process personally. However, I do know people who have and they were successful. Best of wishes to you!
    1Reply
  • Tyrone Miller
    Investor · Flint, TX · Member since 2014 · 14 posts · 2 votes
    10y

    I would look into this closer.  This happened to us in Michigan and our taxes went up because our tenants were not paying for their water, trash, and sewage bills for the year and the city did not let us know but just raised our taxes!  This may not be the case, but look into it for sure.

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  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    10y

    First off no need to panic and sell. Make sure you send in your tax protest by May 31st. The form should have been on the back of your proposed value or you can do it online

    In the meantime, gather information such as comps from your agent and pictures of the house always from the worst angle and accentuating any negatives.  Keep in mind the best comp for your property is your property so the start of negotiations for you is 105k

    You will have the opportunity to meet informally with the appraiser and this is the time to negotiate and strike a deal. At the end of the day, I always recommend taking the deal as success in a formal hearing is difficult at best

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  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    10y

    Besides comps, I would also get on the local tax assessment website and look up several similar neighboring houses. Print out the assessments of those similar neighboring houses that have a lower tax and make that part of your appeal packet.

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  • John Chapman
    Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
    10y

    Yeah, @Jay Hinrichs pretty much hits the nail on the head.  I've been landlording for eight years now, and every year I toy with the idea of just liquidating it all and going somewhere with lower taxes. Rents have, fortunately, gone up enough here to at least cover the increases, and we've had a nice run up in appreciation, but neither can go on forever.  I literally cannot fathom how people can call Texas (or at least DFW) a "cash flow" market.  Our cap ex and taxes make it more like a "break even" market.

    2Reply
  • Tom Feret
    Flipper/Rehabber · Dallas, TX · Member since 2016 · 33 posts · 10 votes
    10y

    Bit of a newbie question:

    How soon after acquisition could you expect a renewed assessment? I was under the impression that they take place every 1-3 years depending on the county/neighborhood. 

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  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    10y

    In Texas, the property valuation can be adjusted yearly up or haha down. You will receive notice of the valuation and will have until May 31st or 30 days after you receive the notice.  A protest cost you nothing but your time .  Also keep in mind tax value in Texas has ZERO effect on the actual value of the property. The only thing a higher valuation means is that you pay more taxes

    @Tyrone Miller

    That would have no bearing in Texas as we are not responsible for unpaid utilities for our tenants

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  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    10y

    @Charlie Rushton great string to read

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  • James Butler
    Real Estate Investor · Corpus Christi, TX · Member since 2016 · 4 posts · 1 vote
    10y
    I purchased my home last year also (homestead not rental) but I purchased it well under market value. My tax appraisal was about 55k above what I paid for it. I went to appraisal district and was told that the value they have is market value. However, I argued market value is what a seller and buyer agree upon. Anyways they reduced mine down to my purchase price. Might only be for one year and shoot straight back up but I'd say it's worth a try.
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  • Peter B.
    Investor · Ogdensburg, WI · Member since 2016 · 273 posts · 351 votes
    10y

    Your value went up 35%.... Not necessarily your tax.. If your entire tax jurisdiction (city,village or town) was under revaluation neighboring properties values may have risen proportionately as well. Which means you would all continue to share the tax levy equally....Did you buy your property via arms length sale From a realtor off of the MLS? (not a foreclosure,short sale, relative, 1031).. If so your purchase price is a good argument for valuation. Either way I would contact assessor and get on the schedule for open book/appeal. Good Luck!

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  • Tyrone Miller
    Investor · Flint, TX · Member since 2014 · 14 posts · 2 votes
    10y

    that's good to know!!  I now have some multiproperties here in TX!  One less thing to worry about. Thanks!!

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  • Account Closed
    OP
    Specialist · San Antonio, TX · Member since 2012 · 865 posts · 351 votes
    10y

    Does anyone know a company close to me that could help me protest the tax appraisal for a reasonable price?

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  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    10y

    @Joel S Why not do it yourself? It's pretty easy process. You'd probably not get any savings by hiring someone in all the fees. This is a process any homeowner can handle.

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  • Justin Fox
    Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
    10y

    Appeal the increase.  After you hear back, only you can decide if the house is worth keeping.

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  • Tanner Thoman
    Pontiac, IL · Member since 2016 · 12 posts · 4 votes
    10y

    Here is the thing, tax appraisers (like most people) try to be as efficient in doing their job as possible and thus they look at just a few properties in an area and if their value has increased then that gets applied across the board. 

    For instance,... I have a home in Rural Illinois and the township there built a new building on their property and renovated another. The net result was a 30% increase in their property value. 

    I got a letter from my insurance company saying I needed to re-paint my house (wood siding) and then got another letter from the tax assessor saying my assessed value had increased by 30%. 

    I called the assessor's office and they candidly explained that since the township's property had gone up they just applied the increase to everyone in the area. My taxes were re-assessed, went down below what they were the year before and did not go up for 2 years after that. 

    Now, this is a small county and the process may be different where you are at but mine was solved with a simple phone call. 

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  • Andrew Herrig
    Rental Property Investor · Dallas, TX · Member since 2012 · 502 posts · 263 votes
    10y

    I am in the process of protesting the taxes on 5 of my 6 properties in Dallas County. I will try to remember to post how it went. One of my properties' valuation went up 40k in 2015 and another 40k in 2016. Crazy. I am seriously considering selling it, but it's tough to find good deals in this market to put that cash back to work.

    Like others have said, if you purchased within the last year or so using a realtor, they should take the price from the HUD as the value. Otherwise, try to find out if your property is valued higher than other similar houses, or try to justify a lower valuation based on repairs or updates needed.

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  • Account Closed
    OP
    Specialist · San Antonio, TX · Member since 2012 · 865 posts · 351 votes
    10y

    Justin, 

    I have an ext

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