Article Contents
Overview
Appraisal districts in Texas are responsible for estimating the monetary value of all real estate in a given county, for the purpose of assessing property taxes on each property.
An appraisal district is a political subdivision, or local government, of the State of Texas. Appraisal districts share the same boundaries as counties, with one located in each county. However, an appraisal district is governed by its own board of directors, and is not part of the county government.
Relationship to Local Governments
Appraisal districts work in conjunction with other local governing bodies to assess property taxes on their behalf, including school districts, cities, and counties.
Prior to 1979, each taxing authority could have its own tax office. Properties within the same area could be taxed at different values by different tax offices having overlapping jurisdiction. The system was confusing and inequitable.
The Legislature passed a new law that required each county to have a single, centralized agency to assess property taxes. For this reason appraisal districts today are still referred to as “central appraisal districts”—because they centralize the tax work of a variety of entities.
Method of Work
Appraisal districts in Texas follow a structured process to determine property values for tax purposes. The process is governed by Texas state law, which sets out specific procedures for the appraisal and assessment of property. This process involves several key steps:
- Data Collection: Appraisal districts gather a variety of data to assess property values, including sales data, property characteristics, construction costs, and income potential for income-producing properties. They also use public records such as deeds, tax records, and aerial imagery to track changes in properties.
- Mass Appraisal System: Texas appraisal districts typically use a mass appraisal system, which means that they appraise properties in groups rather than individually. This system involves statistical methods and technology to analyze data for large numbers of properties. The goal is to estimate the market value of properties as if they were sold on January 1st, the official date of valuation in Texas. Mass appraisal systems ensure efficiency and consistency in property assessments.
- Assessment Methods: Appraisal districts primarily use three approaches to determine property values:
- Sales Comparison Approach: This method involves comparing the subject property with similar properties that have recently sold in the same market.
- Cost Approach: This method is often used for new construction or specialized properties. It involves calculating the cost of replacing the property, less depreciation.
- Income Approach: This method is used primarily for income-producing properties, such as apartment complexes or commercial real estate. It estimates the value based on the expected income the property can generate.
- Exemptions and Special Valuations: Appraisal districts also process applications for exemptions and special valuations, such as those for homesteads, agricultural land, or disabled veterans. These exemptions can reduce the appraised value of a property and, therefore, the taxes owed. Special valuation programs, like the Texas Open Space Land Program (commonly known as “agriculture use valuation”), allow properties used for farming or ranching to be appraised at a lower value.
Once properties are appraised, appraisal districts send property owners a notice of their property value, typically in April or May of each year. If property owners disagree with their appraised value, they have the right to protest.
Organization and Governance
Each Central Appraisal District is headed by a chief appraiser who manages staff, prepares budgets, and oversees the day-to-day district operations.
Appraisal districts in Texas are each governed by a board of directors. The members of the board are appointed by the taxing units within the county. They are not elected.
Taxing units—including counties, cities, school districts, and junior colleges—select directors in the fall of odd-numbered years. The voting share of each taxing unit in the district is determined by the taxing unit’s share of the total dollar amount of property taxes imposed in the district.
By default, each appraisal district has five board members, though this can be increased to 13. The method or procedure for appointing members can be changed by the board of directors or by three-fourths of the voting taxing units acting through resolutions.
Taxpayer Protests
Property owners may protest decisions of their Appraisal District to the local Appraisal Review Board (ARB). The role of the ARB is to settled disagreements between citizens and the county appraisal district concerning the value and taxability of their property.
Decisions of the ARB may be appealed further to a state district court, an independent arbitrator, or the State Office of Administrative Hearings.
Standards and procedures of each appraisal district also are subject to review by the Texas Comptroller of Public Accounts.
Oversight and Compliance
The Texas Comptroller of Public Accounts plays a crucial role in ensuring that appraisal districts adhere to state standards. The Comptroller’s office periodically reviews appraisal districts for compliance with Texas property tax laws, including evaluating the accuracy of property valuations, the effectiveness of their procedures, and their overall performance. If an appraisal district is found to be in non-compliance, corrective actions may be required.
