TAX PROTEST ON NEWLY BOUGHT HOME

8 Replies

Hello,

I recently bought my first investment property in Austin,TX. I bought the home for more than it appraised for in the CAD due to neighborhood comps. I recently received a notice to protest the appraised value of the home and was wondering if I should protest the value of the home if it’s lower than my purchase price. Thanks!

Value: 210K

Purchase: 240K

If you've already closed on the property and you're not planning on getting another loan on it (HELOC or similar), then an appraisal doesn't really matter. Unless I'm missing something, the appraisal was just for your financing.

@O'Neil Mbakwe

You are confusing the tax 'Assessment" with the word "Appraisal". I suspect that is what @Alecia Bolton is referring too.

In my area and I suspect yours, there are companies that specialize in tax assessment appeals. They charge a percentage of the savings. I would look to see if you have companies like this in your area and ask them what they think.

@Alecia Bolton I meant assessment. Thank you for your input. Immediately after making this post I spoke with several property tax agents who recommended not to protest its current assessed value because it’s been assessed at a value lower than my purchase price.

Most counties have an annual process for assessing and protesting. Go to the county assessors site and search for equalization or protest. It's generally a pretty straight forward process that most investors would be able to handle on their own. If you don't have the time and don't mind sharing the benefit any reduction then you could hire a company that specializes in appeals.

@O'Neil Mbakwe That makes more sense.  In that case, you want the assessed value to be as low as possible.  Most counties will raise the assessed value based on the sale price, but will do it on a schedule, not necessarily when the property changes hands.  Each county is different though.

@O'Neil Mbakwe

The assessed value for taxes is usually based on the fair market value. There is no more fair than the price you paid for it... so this value will be the one they will use. However there may be adjustment due to the official date of the tax appraisal that may be different from the purchase date.

I have multiple time challenged and won the tax assessed value based on comp or appraisal. As you know appraisal is an art not a science and that is why you can easily challenge the tax assessor. But when your specific property is sold, that is the most accurate value that you can get for a property. Even if you overpay for it, that is what you accepted to pay, so it is the market value.

@O'Neil Mbakwe well I guess you can always protest, but in my experience the tax authority has access to MLS. So if your sales price was reported in the MLS, what is your argument for a lower market appraisal. I guess you could have one...but I think what they will say is.....you think it is worth less than you paid? They'll pull up the listing and say your sales price was X. Potentially you might could argue unequal appraisal if all the other properties around you are valued less than you paid and they are comparable.

If your bank appraisal shows a lower amount, you could use that value potentially.

Does that make sense?