Affordability and Fairness in Property Taxes
June 10, 2014
Texas can and should create a fairer system of taxation between commercial and residential property taxpayers. But to create truly needed tax relief for homeowners, we must embrace and expand the homestead exemption.
We can improve fairness in appraisals.
Sales price disclosure
- To better assure accurate appraisals on commercial property, require sales price disclosure so that appraisers have the tools they need to establish a property’s market value.
Establish standards of evidence for equal and uniform appeals
- Specify that the appraisal standards used in the equity lawsuits must comply with accepted appraisal methods and match those used for market value claims (See Section 23.013(d) of the tax code)
- Require the court to set the property value based on the market value of the comparable properties rather the median appraised value. Restores the tie to the constitutional standard of market value and addresses the “death spiral” effect
Currently, if the appraisal district loses the challenge, it pays the property owner’s attorney fees up to a specified amount. But, if the property owner loses, it doesn’t have to pay the appraisal district’s costs. This is unfair to the rest of the taxpaying public.
- Both sides — not just the taxpayers via the appraisal district — should be on the hook for costs if they lose. It would prevent frivolous challenges.
- If the value set by the court is within 10 percent of the appraisal, everyone covers their own costs.
Intervention by Taxing Entities
- Allow taxing entities to intervene at the Appraisal Review Board and/or in the litigation to serve as a taxpayer advocate and guard against appraisal districts settling too easily.
Move up appraisal notice and protest deadlines
- Tax agents file at the last possible moment to compress the timeline and pressure the appraisal district to settle. In Travis County, 14,000 protests had been filed as of Friday, May 30. But the appraisal district received 84,000 by Monday’s deadline.
- That leaves the appraisal district only 24 days to get through the 84,000 protests before it must certify the tax roll. Moving those deadlines to 30 days earlier will provide more time to allow the process to work for all taxpayers.
Expanding the homestead exemption guarantees greater affordability for homeowners.
Every homeowner will benefit from a larger homestead exemption
Flat rate is fair to all taxpayers and provides relief to the low- and middle-income families who need it most. A percentage benefits the higher value homes far more.
Index the homestead exemption so that it doesn’t lose value
Cities and counties should use every tool available to them to foster affordability
- Local homestead exemption option
- Governing body shall adopt a homestead exemption of at least $25,000 or 10 percent of appraised value but not more than 20 percent; or
- Hold an election on whether to enact a homestead exemption of at least $25,000 or 10 percent of appraised value.
- The opportunity for an election would allow for a fair debate and discussion about the impact, if any, it would have on services. It would prevent an unfunded mandate from the state and preserve local control.
- Smooth the transition by allowing a phase-in of the exemption so the cities and counties don’t take a sudden hit because of a reduction in the tax base.
- In Austin, a $25,000 homestead exemption would save a homeowner about $125
- It’s time to stop arguing against affordability and fairness proposals on the basis that government will lose something. Focus less on what government is losing and more on how to assure the homeowner benefits.
- Add $10,000 to the school homestead exemption on top of the current $15,000 flat rate, which has not been increased since 1997
- In Austin ISD, lowering the taxable value of the average homestead by $10,000 would save the homeowner $125.
Explore property tax circuit breaker used in other states to ensure to control property taxes particularly for low-income homeowners
- Gov. Perry vetoed a study on the issue in 2009
Apply the same or equivalent tools to the development of affordable housing and rental properties that we use for economic development (i.e. property tax abatements via 313 agreements)
Reduce the interest applied to the liens of seniors who defer their property taxes
- Lowering the interest rate from 8 percent to the Treasury rate less punitive, would reduce the tax liability when the resident sells or dies
© 2016 Kirk Watson Texas Senator All Rights Reserved
Political advertisement paid for by Kirk Watson Campaign,
P.O. Box 2004, Austin, TX, 78768; Rosie Mendoza,Treasurer.