I could, and probably will, entertain several long winded rants about the real property tax appraisal and assessment system in Texas. It is the most convoluted and unjust taxing system one can imagine. It will take me at least three posts to get through a comprehensive discussion of the process, and there simply isn't time to make the BIG case prior to Tuesday. Here is the issue in a nutshell, with much more to come in future posts.
Texas is a non-disclosure state. There is no law requiring anyone to disclose the facts and/or amounts of any real estate transaction.
The tax appraisal system is based on what the tax assessor believes to be the 'fair market value' of property.
How in the world can you ever come to justifiable conclusions about fair market value if there is no legal requirement for anyone to disclose what they paid for a piece of property?
The answer is, you cannot. That is how tens of thousands of Texans either cheat the system or the system cheats them. End of story.
Prop 2 authorizes the legislature to require that a residence be appraised only on the basis of the property’s value as a residence, regardless of what the highest and best use of the property may be. This is the biggie, the one that has been sticking it to people in my town for the past several years. Residence homesteads throughout the state have experienced increasing appraisal values, in some instances more than 200% in one year, especially if the property is not covered by zoning regulations, due to the appraisal practice known as “highest and best use”, This method allows property to be valued on its potential use rather than the current use.
I live in a former agricultural community, where most of the land was farmed for decades. As development encroaches, suddenly Mr. Strip Mall developer takes an interest in Farmer John's pasture near the highway. Farmer John wants to retire, so he sells the family farm to Mr. Strip Mall and real estate comps go through the roof. Poor Farmer Brown next door just wants to farm, but now his appraised value has increased 200% because of the potential value of his property, not the value as it is used by the tax payer today. All of which is doubly ironic, because every developer will immediately begin to graze cattle on the land they are parceling together, in order to take the agricultural exemption. This proposition is one of many potentially positive steps needed to correct our appraisal system.
My house sits on just over 3 acres. It is in the middle of a neighborhood that has a 2.5 acre minimum lot size, so I can't sell off a piece of my land - it is simply my (big) yard. Unfortunately, folks like Farmer John sold off their acreage for a pretty penny and those are the comps that the appraisal district uses for a 'per acre' land value assessment. It is asinine to think that the land on my three acre plat, with an existing structure, should be valued the same as 3 acres of undeveloped, highway frontage land. I can't portion it out and sell it off. My land is worth $83,000 more than my house. On paper you would assume I live in a 3,000 sf outhouse. Stupid system.
Prop 3 would allow direct state enforcement authority and oversight over local appraisals in order to attain uniformity and equity of appraisal processes throughout the state. There is a possibility that this state-level oversight will result in negative situations due to ignorance of local conditions. Honestly, I don't know how it could get much worse. Even at the county level they are often out of touch with local municipalities and their market conditions.
Prop 5 would allow a single board of equalization for two or more adjoining appraisal entities that want to consolidate their appraisal review process. This is basically a case of some areas having too shallow of a pool of qualified people to serve on the board of equalization. Having traversed our great state far and wide, I can see where places like Loving and Reeves counties would benefit from combining services.
If you are a Texan and haven't yet voted, make time on Tuesday and vote YES on Propositions 2, 3 & 5.