In 2018, the Texas property tax appeal deadline was moved up by two weeks. Prior to last year's change to May 15th, the Texas deadline for appeals had always been May 31st. With the new deadline in place, it is possible that some commercial property owners failed to timely appeal their taxes. However, there is a little known “loophole” in the tax code that does allow for a late protest.
What is the Substantial Error Provision?
Property owners can file a substantial error correction appeal (25.25d) until January 31, 2019. Any owner that did not have an appeal granted during the normal 2018 appeal cycle and has a “substantial” error in the 2018 property value qualifies for this late deadline. A substantial error has been defined as an overvaluation of more than 33 percent. While the substantial error appeal provision allows for a late protest, it does come with a price. There is a 10 percent late protest penalty.
How Do I Know If My Property Qualifies?
The short cut to determine if a property can meet the substantial error test is as follows:
Let's say you bought a property on May 16th for $7,499,000 and you found out after the appeal deadline of May 15th that the property was valued at $10,000,000. Since you did not appeal the taxes, you are in luck!
Assessed Value $10,000,000 x .75 = $7,500,000. Mathematically, this meets the threshold. $2,500,000 (amount over assessed) / $7,500,000 (your purchase price) = .3333 or 33%.
Based on the above sample meeting the 33% rule requirements, an appeal could be filed to obtain a $2.5 million reduction. This value reduction would result in property tax savings exceeding $50,000 in taxes in virtually any county in Texas.
What Steps Should I Take Next?
The 33 percent "substantial" error threshold is sometimes difficult to meet, and the straightforward law is not something you can get around. However, Paradigm Tax Group files late protests on behalf of commercial property owners with great results every single year. It is important to have experienced representation on your side because the Appraisal Review Board will hold a substantial error hearing if a value agreement cannot be met with the Appraisal District. If you believe you might have an eligible commercial property with a “missed appeal” in Texas, please don't hesitate to contact me. We can determine whether your property is a good fit to file a substantial error correction appeal and assist you through the process.
Market Leader, North Texas