In 2013 Frank Wagnon built his home in Southlake for $926,400. Since that time, the value of his home has increased exponentially, he said.
“I understand … building houses costs a lot more and the value of my home had probably gone up, but this is just crazy,” he said.
This year the Tarrant Appraisal District valued Wagnon’s home at $1.06 million, a 14.13 percent, or a $133,600 increase from when he purchased his home five years ago.
In response, when the TAD sent Wagnon its annual appraisal notice, he protested and successfully decreased the appraised value of his home.
There are other homeowners in Grapevine, Colleyville and Southlake with similar stories.
According to preliminary 2018 reports, the average appraised home value in Grapevine increased by approximately 29.15 percent from 2015-18. In Colleyville it was 16.05 percent, and in Southlake it increased 22.05 percent, leaving residents with a higher tax bill than previous years and more reason to protest their appraisal value.
The TAD received more than 140,000 residential property protests this year—up from a little more than 137,000 in 2017, according to TAD reports. Of those, 4,516 protests came from Southlake, 3,828 came from Grapevine and 3,659 came from Colleyville.
“Property protests correlate directly to the real estate market,” Tarrant County Chief Appraiser Jeff Law said in an email. “When the market is up or rising, so will protests. The benefit to protesting is that you might have the market value of your home lowered some, and this will possibly translate into lower taxes.”
He urged residents to pay attention to their city’s local tax rates in addition to their own property taxes.
“Property owners need to understand that … taxing units also set tax rates that have an effect on property taxes,” Law said. “Usually people protest value, but rarely do they ever attend meetings concerning the setting of the tax rates. It’s a two-step process, and taxpayers should be involved in both steps.”
Some Texas lawmakers have also tried to slow rising property tax revenue increases as appraisals continue to climb.
Bobby Ola of Ola Taxes in Southlake helps people protest their property taxes all over the Dallas-Fort Worth area. He said he encourages people to protest, and not just because it is his profession.
“I want to get that [value]as low as possible because the lower you can keep it the better, especially if you have a homestead [exemption],” Ola said. “There’s a 10 percent cap [to increase the previous year’s assessed value], so if you get it really low one year, then the next year they can only go up 10 percent. If you keep fighting and chipping away then you have benefits in the long term.”
He said some people perceive protesting the value of their homes as a price reduction for the home’s sale price. But that might not be the case. What actually happens, he said, is a potential buyer will have a certified appraiser sent in before the home is purchased to find the true value. That value might be higher or lower than the tax appraised value, Ola said.
“So the [TAD appraisal] is just a starting point,” he said. “I don’t see any benefit at all for [the appraised value]to be higher, personally.”
Grapevine resident Christie Partee, for example, has been able to decrease the appraised value of her home every year she protested.
Partee purchased her home in 2009 for $192,000. When she received her appraised value in April, her property was appraised for $98,000 above the purchase price. After protesting, Partee was able to lower her 2018 appraised value by approximately $15,000.
“If you let that go it adds up,” she said.
An ‘enormous task’
When appraising a property, the TAD looks at actions of buyers and sellers in the neighborhood over the past six to 12 months.
“While protesting your property value is indeed important to ensure your taxable value is not inflated, it is equally important for citizens to make sure the tax rates are also established correctly in their local communities,” Law said in an email.
He said state law requires the TAD to use a mass-appraisal system to appraise all 1.75 million property accounts in Tarrant County each year.
“In order to accomplish this enormous task, we use primarily the cost and market approaches to value for residential property and the cost, market and income approaches to value for commercial properties,” Law said.
He explained the cost approach is what it would cost to replace a home or building, taking into account any depreciation the building has suffered. The market approach is analyzing what comparable properties are selling for in a market area.
There are challenges, however. Homes in established neighborhoods, such as Partee’s, are often harder to appraise due to the lack of adequate comparable sales in the neighborhood. During the appraisal review board hearing, Partee brought a spreadsheet and map of eight comparable property overviews.
“I looked on the appraisal district website … and ours was the highest [of the comparable houses],” she said. “… Because my house was the one that sold most recently, the appraisal district had it marked as the highest.”
Cities offering to help
Many residents and city officials are worried about the rising cost of living and financial burden that increasing home values are putting on people.
Colleyville resident Chris Marsh said when she and her husband retire, they plan to move out of Colleyville.
“I couldn’t afford to stay in Colleyville,” she said. “Anything in Colleyville would have these crazy taxes.”
Both Grapevine and Southlake offer a 20 percent homestead exemption, which removes part of a home’s value from taxation. Colleyville does not provide a homestead exemption but has decreased its tax rate for the last two years to accommodate for the rising value of homes.
“We have chosen to go the route of keeping our tax rate as low as absolutely possible,” Assistant City Manager Adrienne Lothery said in an email.
During the 2017 legislative session, Senate Bill 2 was brought to the table. Under the proposal, a special election would be called whenever the local property tax collections increase more than 5 percent year over year.
SB 2 did not pass during regular session or during a special session. However, Gov. Greg Abbott unveiled a plan in January to limit local government’s property tax revenue growth to 2.5 percent—half of the proposed limit in SB 2.
State law already allows citizens to petition for a rollback election—which is a referendum on the proposed tax rate—when annual tax collection increases exceed 8 percent.
Colleyville City Manager Jerry Ducay said one of the city’s goals is to minimize the impact of increasing property taxes on residents.
“The city of Colleyville seeks to minimize the property tax impact on property owners through lean and efficient municipal operations,” Ducay said in an email. “We will continue to apply this stringent approach regardless of state limitation.”