Property taxes can be a confusing subject, and it’s easy to make mistakes that can financially put you in the wrong place. If you’re new to the topic, let’s discuss how the appraised value is determined by the County Appraisal District. 

Let’s understand how the property is appraised in Texas and the three usual valuing property methods, what you can do to evaluate if your property was valued correctly and how this can affect your property tax bill.

Once every three years, each county appraisal district in Texas is needed to find the value of properties within their county lines. If mass appraisals are used, appraisal districts must comply with the Uniform Standards of Professional Appraisal Practice to ensure equal treatment for all the properties. 

Before the appraisal process starts, the appraisal district puts together a list of taxable properties that includes a description of the property and the name and address of the owner of the property. For mass appraisals, the property can be classified on factors such as size, use, & construction type. Using the data from recent property sales, the appraisal district appraises the value of typical properties in each class. Taking into account differences such as age or location, the appraisal district uses typical property values to appraise all properties in each class. 

There are three common approaches that the appraisal district might use in appraising properties – the sales comparison (market) approach, the income approach, & the cost approach. 

Market Approach:

This approach is the most common approach used. It looks at recent sale prices of similar properties of the property being appraised. It compares those prices and adjusts the comparable properties for the differences between them and the property being appraised. For example, the property being appraised has a fireplace but none of the comparable properties do, the property being appraised might come out having a higher value. 

Income Approach: 

This approach is based on income and expense data and is used to determine the present worth of future benefits. It seeks to determine what an investor would pay now for a future revenue stream anticipated 

Cost Approach

The approach is probably the most simple, it is based on what it would cost to replace the building with one of equal utility. Depreciation is applied and the estimate is added to the land value. 

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