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Study: Majority of lower-priced homeowners don't appeal higher property taxes

USA TODAY logo USA TODAY 5/20/2022 Terry Collins, USA TODAY

About 60% of lower-priced homeowners may pay higher property taxes than their counterparts who own more expensive homes, a new study shows.

Why? Owners of those higher-valued properties, ranging from $500,000 to $1.2 million, are at least two times more likely to appeal their property taxes and possibly pay far less, said Ownwell, a property-based startup in Austin, Texas. The amount of appeals depends on the county and the state.

For example, homeowners of higher-value properties in Harris County, Texas, which includes Houston, were about six times more likely to appeal their property taxes owed. Ownwell's findings are based on researching public national county assessor data and more than 10,000 of its customers across the country.

Kent Revard said he's using startup Ownwell to help appeal the price of his property taxes on his home in Houston. © Handout Kent Revard said he's using startup Ownwell to help appeal the price of his property taxes on his home in Houston.

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They conclude that homeowners who bought houses ranging from $125,000 to $400,000 often don't challenge what they have to pay in property taxes.

The findings also mirror national statistics, as less than 5% of homeowners go through the process of challenging their valuation, according to the National Taxpayers Union. The organization estimates that between 30% to 60% of properties are over-assessed.

"What's happening is that the majority of homeowners get their property taxes and simply pay the bill to avoid problems," said Ownwell co-founder and CEO Colton Pace. "But they should do a double-check. The bill is an opinion of the value of your home. And if you think it's too high, you can contest your property taxes, it's your legislative right."

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Ownwell's study comes at a time when homeowners across America are paying their property taxes and deciding whether the state tax assessment was higher than what homeowners believe their property is worth. Property taxes usually help fund general public services, improvements to infrastructure, and public schools. Some states seek property taxes annually or every two years. 

Either way, many homeowners often dread the property tax process. Ownwell's study also comes at a time when nearly 70% of Americans say it is currently not a good time to buy a home, according to a recent Gallup Poll. High home prices, limited supply and high demand are among the reasons, the poll said. 

"There are two ways to thinking the value of your real estate," Pace said. "Yes, you want the value of your property to be as high as possible, but you also want your taxes to be lower. That's what confuses and frustrates both home and business property owners."

For homeowners, the average annual property tax bill has risen more than 4% and could be as much as $4,000, Ownwell's Pace and the National Taxpayers Union estimated. But for some homeowners who are overpaying by up to 60%, appealing property taxes could bring back savings of up to $1,800, the taxpayers union said.

Pace also said many homeowners fear that appealing a property assessment will penalize them or increase their property taxes because they are questioning either their county or local assessment. But there's little to no risk to appeal, Pace said.

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The worst that can happen is that homeowners have to pay the estimated property tax bill, Pace said. Taxpayers typically have 30 to 45 days to appeal. 

"We get calls from homeowners who don’t understand the process," Pace said. He adds that not appealing a possible inaccurate property tax bill will not only impact this year’s bill but future property tax assessments. 

The appeal of appealing property taxes

Ashley Jamieson, a real estate agent based in Austin, said many homeowners are unaware they can claim exemptions for property taxes on their homes. According to Ownwell data, in Travis County, where Austin is located, homeowners with high-valued properties are two times as likely to appeal their property taxes.

"They presume it’s more complex, obviously it is, but if they feel strongly, they need to say 'Yes, I protest this assessment,' and do it themself or contact a company to help," Jamieson said. "The odds are in their favor that they will get a reduction of some sort."

Jamieson said deciding to appeal property taxes in itself makes it more intimidating and that's why many avoid it. The Travis Central Appraisal District said it is expecting a record number of appeals of property values.

"We just don’t know as consumers that we have a voice," Jamieson said about appealing. "It’s not you will get in trouble. You're not going up and chanting against the appraisal district, you’re just making a case for why your assessment should be lower."

She said she had seven clients who bought homes in 2021 who may be looking at paying property taxes with increases ranging from 37% to 125% if they don’t protest their assessment and seek homestead exemptions.

"It’s not a possibility, that is the data pulled straight from traviscad.org. So unless they protest that is the assessed value on which they will be taxed," Jamieson said. "This is happening because when there is a transfer of ownership the Counties will reassess the property value."

Jamieson said the situation was not unique to those clients.

"This is the situation for nearly every single homeowner that acquired a property in 2021. For investors, it doesn’t matter when they purchased, they are not able to put homestead exemptions on their properties," Jamieson said. "Therefore their values can’t be capped, they are through the roof."

'Optimistic' for a lower property tax bill

Kent Revard of Houston still wonders whether he did everything he could when he has appealed   his property taxes on his two-story, four-bedroom home.

The longtime sales manager in the construction industry said there have been some years when the assessed and market value of his home were either the same or within a 1% difference.

But with fears of having to pay a high property tax, Revard, 59, said he's now using Ownwell to appeal after hearing about the startup from a friend. He's already pleased that Ownwell charges no fees upfront and he'll be charged a flat percentage fee.

Why? Because Texas has raised the state's homestead exemption, the portion of a homeowner's home value exempt from taxation, to $25,000. State law also limits the taxable value of a home from rising more than 10% each year.

That's an awful lot in Revard's opinion, who said he believes his property value has soared 20% in the past year.

"I feel optimistic that having a third-party firm will be effective," Revard said. "They will have some skin in the game as well. We'll see how the appeal process works." 

Pace, who co-founded Ownwell two years ago, said its average customer sees between an 8% to 10% reduction and saves about $1,450 using the site. He said the company takes a 25% fee for its service.

"And if our customer doesn't get any money, we don't either," Pace said. "We want to give back some savings.

Pace added, "If we do save you money, you walk away with some cash and a reduced property tax bill."

With inflation and high gas prices already wreaking havoc, Revard hopes Ownwell will prevent him from having to pay a high property tax bill. 

"I'm hopeful they will be a benefit," he said. 

Follow Terry Collins on Twitter: @terryscollins

This article originally appeared on USA TODAY: Study: Majority of lower-priced homeowners don't appeal higher property taxes

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