My monthly tax payment increased by a $600

[Jamaal Smith]

Hello,

I hope this message finds everyone well. My monthly tax payment on my 4-plex went from $1200 to $1800. It is located in Irving TX and is owner occupied. I am also a veteran if that is relevant.

I was told I needed to speak to a tax attorney to lower it. Is this true? If not what is the best way to reduce my tax payment to what it was originally and is it possible to prevent increases in the future?

Thank you for the help in advance!

[Mike Dymski]

Quote from @Jamaal Smith:

Hello,

Is it possible to prevent increases in the future?

Vote for politicians who won't raise the money supply by 40% again.

[Russell Brazil]

Quote from @Mike Dymski:

Quote from @Jamaal Smith:

Hello,

Is it possible to prevent increases in the future?

Vote for politicians who won't raise the money supply by 40% again.

 Absolutely amazing that real estate and other prices rose a similar amount as the increase in the money supply.  Also absolutely amazing that the people most angry about inflation ignore the fact of when that money supply was increased.

[Chris Seveney]

@Jamaal Smith

Was the increase due to local tax increase in rates or due to valuation

Most property taxes are increasing significantly as is insurance because of inflation - everything has gotten more expensive

You can try and contest the assessment and see if it reduces taxes.

[Alecia Loveless]

@Jamaal Smith I would find out how much it costs to hire someone and do that.

My family in Texas has several real estate portfolios and their taxes have increased over 125% across the board in the past three years.

They have told me that to go past the first level of fighting your taxes, to the appeals part of the process, you need to have an attorney but that it gets expensive quickly.

This last tax season they both went all the way through the process with various properties and got minimal relief. They said the boards have become greedy and aren’t even considering actual comps, they just deny everything.

[Jamaal Smith]

Quote from @Chris Seveney:

@Jamaal Smith

Was the increase due to local tax increase in rates or due to valuation

Most property taxes are increasing significantly as is insurance because of inflation - everything has gotten more expensive

You can try and contest the assessment and see if it reduces taxes.

 I was told it was due to the value increasing

[John Underwood]

I successfully contest my own property taxes and get them lowered. There are also companies that can do this for you that would be better suited than an attorney. 

$200 per unit doesn't sound all that bad though.

[Patrick Roberts]

Quote from @Jamaal Smith:

Quote from @Chris Seveney:

@Jamaal Smith

Was the increase due to local tax increase in rates or due to valuation

Most property taxes are increasing significantly as is insurance because of inflation - everything has gotten more expensive

You can try and contest the assessment and see if it reduces taxes.

 I was told it was due to the value increasing

 Check to see whether the tax authority's assessment of the property value is reasonable. It could be this was a standard periodic reassessment to account for market value increases and there's nothing to fight. I'm not super familiar with TX, but an area of Louisiana that I work is currently in a reassessment year and a lot of people I know are getting sticker shock from tax increases. 

Also, check whether there was an escrow shortage when taxes were last paid by the servicer. If the taxes were increased and the escrows that were collected up to that point were insufficient to cover the new tax bill, then your future mortgage payment will increase by an amount that will cover the new tax bill AND make up for the shortage from the previous payment. Once the shortage is repaid, the monthly payment will drop by a corresponding amount. This is commonly repaid over a one year period.

To clarify with an overly-simple example- you said $600/month in an increase. It's possible that the annual tax bill increased by $3,600.00/year, and there was a shortage of that amount when the bill was paid. Going forward, the tax escrow component of your mortgage payment increased by $600. $300 is to escrow for the new annual tax bill, and another $300 is to repay the $3,600 shortage that the servicer paid on your behalf previously. Once the shortage has been repaid, the payment will be adjusted again and the $300 shortage repayment component will be removed. I don't know if this is what happened, but I see this scenario a lot. A quick call to your servicer will clarify.

[Don Konipol]

Quote from @Jamaal Smith:

Hello,

I hope this message finds everyone well. My monthly tax payment on my 4-plex went from $1200 to $1800. It is located in Irving TX and is owner occupied. I am also a veteran if that is relevant.

I was told I needed to speak to a tax attorney to lower it. Is this true? If not what is the best way to reduce my tax payment to what it was originally and is it possible to prevent increases in the future?

Thank you for the help in advance!

There are numerous property tax protest companies in Texas.  They charge 1/3 to 1/2 of the amount of money they save you. 

[Lucia Rushton]

@Jamaal Smith will DM you.

[Bruce Lynn]

You can file a protest to tax values in the Spring.  There is normally a specific timeframe to do so when the values come out.  You do have to prove your value, not just ask for a reduction.  You can do it yourself, but you can also hire someone to do it for you.  No guarantee of a reduction, but you can always try.

[Randall Alan]

Quote from @Jamaal Smith:

Hello,

I hope this message finds everyone well. My monthly tax payment on my 4-plex went from $1200 to $1800. It is located in Irving TX and is owner occupied. I am also a veteran if that is relevant.

I was told I needed to speak to a tax attorney to lower it. Is this true? If not what is the best way to reduce my tax payment to what it was originally and is it possible to prevent increases in the future?

Thank you for the help in advance!

@Jamaal Smith

There are a number of things we don’t know about your situation… such as, how long have you owned your property?

If you bought it in the last 2 years, you may just be seeing the result of the property tax assessor factoring in the new value of the sale. 

The documentation they provide with your tax notice will clearly show how they have changed their valuation.   It could be they raised millage rates which would mean everyone’s taxes went up.  I’ve had it where they went and did a special project just to look at multi-family properties to bring them more into agreement with todays valuations, etc.  

$600 is really not a huge increase in my book.  We have seen double and triple that on the insurance side of things in a year.  But I do tell my tenants when raising their rents why they are going up… sometimes even showing them the paperwork!

Unless there is an obvious error, you will likely be fighting an uphill battle.  The appraisers are professionals and usually undervalue your property by about 15-20% just to avoid people complaining too much.  You will have to show that the value they say your property is worth in the market is off by more than that 20% to even start to have traction.  It’s a tall order usually.

All the best.  

Randy 

[Jamaal Smith]

Quote from @Randall Alan:

Quote from @Jamaal Smith:

Hello,

I hope this message finds everyone well. My monthly tax payment on my 4-plex went from $1200 to $1800. It is located in Irving TX and is owner occupied. I am also a veteran if that is relevant.

I was told I needed to speak to a tax attorney to lower it. Is this true? If not what is the best way to reduce my tax payment to what it was originally and is it possible to prevent increases in the future?

Thank you for the help in advance!

@Jamaal Smith

There are a number of things we don’t know about your situation… such as, how long have you owned your property?

If you bought it in the last 2 years, you may just be seeing the result of the property tax assessor factoring in the new value of the sale. 

The documentation they provide with your tax notice will clearly show how they have changed their valuation.   It could be they raised millage rates which would mean everyone’s taxes went up.  I’ve had it where they went and did a special project just to look at multi-family properties to bring them more into agreement with todays valuations, etc.  

$600 is really not a huge increase in my book.  We have seen double and triple that on the insurance side of things in a year.  But I do tell my tenants when raising their rents why they are going up… sometimes even showing them the paperwork!

Unless there is an obvious error, you will likely be fighting an uphill battle.  The appraisers are professionals and usually undervalue your property by about 15-20% just to avoid people complaining too much.  You will have to show that the value they say your property is worth in the market is off by more than that 20% to even start to have traction.  It’s a tall order usually.

All the best.  

Randy 

I bought it in February 2023 and this is my first property. I only received a letter from the appraisal office saying that the value went up but no notice about my taxes going up by 50%. I bought it for $530,000 in 2023 which is what it appraised for at the time. The appraised value is now around $690,000.

Market rents were $1200 when I bought the property and my tenants will just now be paying that this October if that make sense. That is to say: they will be paying last years market rents this year since their rents were below market rates when I bought it. In retrospect, I should of increased rent to $1200 last year.

When I bought the property, everyone’s renta were just below $1100. (I’ve increased rent between 3-5% in 2023 and another increase goes into effect October 2024)

I’ll do whatever I can to lower the taxes but if I can’t, I may have to increase everyone’s rent by another $200 to $1400. I might just eat the cost and increase the rent next year since I already sent out the rent-change-notice for this year. The tenants only have to pay electric and they get parking, and a garage while I cover water, sewer, trash, and gas. They are getting a great deal. 

All my tenants are month-to-month at the moment as well. I hope this provides more context. Thanks so much for your honest input.

[Randall Alan]

Quote from @Jamaal Smith:

Quote from @Randall Alan:

Quote from @Jamaal Smith:

Hello,

I hope this message finds everyone well. My monthly tax payment on my 4-plex went from $1200 to $1800. It is located in Irving TX and is owner occupied. I am also a veteran if that is relevant.

I was told I needed to speak to a tax attorney to lower it. Is this true? If not what is the best way to reduce my tax payment to what it was originally and is it possible to prevent increases in the future?

Thank you for the help in advance!

@Jamaal Smith

There are a number of things we don’t know about your situation… such as, how long have you owned your property?

If you bought it in the last 2 years, you may just be seeing the result of the property tax assessor factoring in the new value of the sale. 

The documentation they provide with your tax notice will clearly show how they have changed their valuation.   It could be they raised millage rates which would mean everyone’s taxes went up.  I’ve had it where they went and did a special project just to look at multi-family properties to bring them more into agreement with todays valuations, etc.  

$600 is really not a huge increase in my book.  We have seen double and triple that on the insurance side of things in a year.  But I do tell my tenants when raising their rents why they are going up… sometimes even showing them the paperwork!

Unless there is an obvious error, you will likely be fighting an uphill battle.  The appraisers are professionals and usually undervalue your property by about 15-20% just to avoid people complaining too much.  You will have to show that the value they say your property is worth in the market is off by more than that 20% to even start to have traction.  It’s a tall order usually.

All the best.  

Randy 

I bought it in February 2023 and this is my first property. I only received a letter from the appraisal office saying that the value went up but no notice about my taxes going up by 50%. I bought it for $530,000 in 2023 which is what it appraised for at the time. The appraised value is now around $690,000.

Market rents were $1200 when I bought the property and my tenants will just now be paying that this October if that make sense. That is to say: they will be paying last years market rents this year since their rents were below market rates when I bought it. In retrospect, I should of increased rent to $1200 last year.

When I bought the property, everyone’s renta were just below $1100. (I’ve increased rent between 3-5% in 2023 and another increase goes into effect October 2024)

I’ll do whatever I can to lower the taxes but if I can’t, I may have to increase everyone’s rent by another $200 to $1400. I might just eat the cost and increase the rent next year since I already sent out the rent-change-notice for this year. The tenants only have to pay electric and they get parking, and a garage while I cover water, sewer, trash, and gas. They are getting a great deal. 

All my tenants are month-to-month at the moment as well. I hope this provides more context. Thanks so much for your honest input.

 @Jamaal Smith

In Florida, the property appraiser provides a detailed mailing showing all taxes for last year, as well as the proposed taxes for the current year with any increases, as well as a column if the increases aren't approved (or something like that.)

I think I missed the fact that you say this was a $600 increase per MONTH!  So that is a $7200 increase for the year if I am reading that correctly.  If that is the case, to understand this you have to look at the previous year's taxes for valuation - especially what the taxable value was for the prior owner.

I suspect this is very much a first time buyer's issue - where you weren't expecting the increase, but typically there is an increase to market value.  There are still things we don't know... like what the value of other properties like yours in the area are worth...but I will throw out a couple of thoughts for you.

As to appraised value - many appraisers look at what the property is being sold for and base their appraisal around that number.  There is a logic that says they don't want to be below that number because it wouldn't appraise at value... but then there is also a logic that they don't want to be too much above your sales price either or the lender starts going "Is there something wrong with the property... why isn't it selling at market value?"  We have bought 25 properties in the past 6 years and almost ALWAYS, the appraised value comes in just above sales price.  So my point would be that the appraised value isn't always equal to actual value on a purchase appraisal.

If everyone is month to month you have a lot of flexibility to go back to them and say, "Hey, we just got the property tax increase for the year and this will necessitate an increase in rent to $X,XXX/ month.  That is the benefit to the landlord, and the disadvantage to a month to month tenant... rent can be changed at any time.  

While 3-5% increase is the tolerable 'nice' approach, it isn't on you to absorb market increases in expenses if you aren't on a yearly lease with your tenants.  We bought a duplex where the tenant was at $450/month, when market rents were at $850 back in 2018.  We went to the tenant and said, "Because of the price we paid for the unit, your rent will need to increase substantially.  Next month your rent will be the same as it was this month ($450), the following month it will increase to $650 (one half way to the target rent of $850), and the following month it will increase to $850.  So we stepped them into the much higher rent across 90 days.  We gave them the option to move if they needed to - and by doing it the way we did it, it gave them time at their old rate to absorb the news and make a decision for themselves without them being under extreme pressure to move immediately.  (It was the best version of 'nice' we had to offer.). Sometimes business moves sort of suck for the tenant - but at the end of the day they have to be done because you are running a business, and not a charity. 

Back to the original question - do you think you bought your duplex under market value based on what other units were selling for at the time?  You can use Zillow and zoom into the neighborhood and look for other recent sales and see what the prices are going at.  If the property appraiser is saying $690k when you paid $530k - they are basically saying "you got a great deal on your property because it is actually worth much more than you paid."  If that isn't the case you can appeal their ruling.  I have called up the property appraiser's office more than once to speak with an appraiser who were always very nice to explain how they come to their decisions.  

If you look at the screen shot below from my property appraiser's website you will see that there is something called a Cap Differential.  The Cap Differential is the amount by which the property value has increased, but the County can't tax it because it exceeds the limit by which they can increase the taxes in a given year.  I think they are limited to like 3.5%/year they are allowed to raise them or something like that.  HOWEVER, as soon as a property sells on the market (or is refinanced interestingly), the cap differential goes away, and all of a sudden you would see the taxable value of the property jump from $370,000 to $657,000 - more or less doubling the taxes on the new buyer.  This is a known thing if you have bought and sold properties... but to a new first time buyer it can be a shock!  I don't know if this is in play for you or not... but it could also help explain the significant jump in taxes if it applies.

I would start off with a call the appraiser and discuss the situation.  My guess is they will have a very good, logical explanation on how things 'went down' with your taxes.  The good thing is that you have options to compensate for the increase by passing it along to your tenants.

Wish you all the best!

Randy

[Colby Hanley]

Quote from @Jamaal Smith:

Hello,

I hope this message finds everyone well. My monthly tax payment on my 4-plex went from $1200 to $1800. It is located in Irving TX and is owner occupied. I am also a veteran if that is relevant.

I was told I needed to speak to a tax attorney to lower it. Is this true? If not what is the best way to reduce my tax payment to what it was originally and is it possible to prevent increases in the future?

Thank you for the help in advance!

Aloha Jamaal

Thank you for your service. I am not sure if you have a VA rating, but if you do in Texas you can receive a property tax break.

The disabled veteran must be a Texas resident and must choose one property to receive the exemption. In Texas, veterans with a disability rating of: 100% are exempt from all property taxes. 70 to 100% receive a $12,000 property tax exemption.

We have similar rules in Hawaii.  I live/own a multi-unit property and receive the reduction for the portion I live in.  You may want to look in to this option.