CHIEF'S APPRAISAL: How will my appraised value affect my tax amount?
With few exceptions, if you own land, buildings, a mobile home, mineral interest, or income producing business assets, you will have to pay annual property taxes on it. Total exemptions exist for local governments, religious and charitable organizations and veterans with 100 percent disability.
Everyone else will be paying property taxes to protect their ownership interest in their property. A tax lien in favor of the local taxing entities automatically attaches to the property, and if taxes go unpaid, the lien can be foreclosed on and the property seized.
The amount of taxes paid will be based on the tax rates adopted by each taxing entity and the taxable value of your property. The taxable value of each property in Ector County has been determined by the Ector County Appraisal District. All property owners were notified by the district of their 2011 market value, and the Appraisal Review Board has heard and ruled on all timely filed protests. The appraisal district notified all the taxing entities what the taxable value base is for their entity, and after adoption of budgets, the taxing entities held public hearings and adopted a property tax rate that will generate the tax levy needed from local property taxes to support that budget.
When we notified each property owner about the value, we included three types of value. The values that we must determine are market, appraised and taxable value. Lots of questions arise concerning the differences in these values so I want to use this opportunity to further explain them.
We start with determining the market value of all property. The market value is the price at which property would sell for on the open market where the seller is trying to maximize his gain and the buyer is trying to minimize his costs. This is called an “arm’s length” transaction which basically means that neither party has an advantage over the other. Sales that could possibly not qualify as arm’s length transactions would be sales between family members or business partners, certain invalid foreclosure sales, or an expansion sale where an adjoining property is purchased based solely on location regardless of price. We determine what a property would sell for by comparing it to similar properties that have recently sold.
The appraised value is the same as the market value unless the property is subject to a value limitation which will lower the appraised value. All property that has been granted a residential homestead exemption qualifies for a 10 percent limitation on the amount of increase that will be subject to taxation. What that means is, if a residential homestead property would sell for 20 percent more this year than last year, the value subject to taxation would be limited to a 10 percent increase. In a rising market, the limitation has a cumulative effect. If a property’s market value increases by 20 percent each year for three years, that will be a total increase of 60 percent. However, the appraised value subject to taxation will only have increased by 30 percent during the same three years. If in the fourth year, the property’s market value levels out, the appraised value will continue to increase until it catches up with the current market value.
As an example, if your 2011 market value is $120,000 but your prior year appraised value was $100,000, then your 2011 appraised value will be limited to $110,000 ($100,000 in 2010 plus 10 percent or $10,000).
To find taxable value of an owner occupied homestead property, subtract the amount of the homestead exemption from the appraised value. Each taxing entity offers different homestead exemption amounts and percentages so the amount of value exempted will vary from the school, college, city, county, and hospital. The good news about all this information is that on the example given above, the appraised value limitation and the homestead exemption will reduce the total amount of tax to be paid by as much as $800 or more.
