Momentum - Business to Business Online Magazine MOMENTUM Feb_Mar 2019 | Page 16
TAXING MATTERS
CHERYL E. JOHNSON, PCC
Galveston Co. Tax Assessor Collector
[email protected]
Tax Tidbits – A Refresher
T
here is absolutely nowhere to hide from
the more than 60 different taxes and fees
in Texas! With 2018 property taxes now
paid, income taxes are on the horizon but
I challenge you to tally every tax, fee and
surcharge paid for one 30 day period. I was dismayed
to discover that income taxes are only half of my
government obligation each year.
What is one to do? Not much except eliminate
the source. Although some are dumping real estate
holdings, no one is tossing the cell phone in the trash
or taking a bus instead of jumping behind the wheel of
a car.
When it comes to
your property taxes (real
or business personal),
the obligation is more
transparent than the taxes
and fees added to every
other bill you pay and, to
some extent, you are in
control of the bottom line.
Land and improvements
thereon are real property
and the value is based
on the market value
(price a knowledgeable
buyer would pay and
an unmotivated owner
would sell under normal
conditions). For a house, simply determine what one
sells for in your neighborhood, divide by $100 and
multiply that times $2.75. This is close to your total local
property tax obligation.
The down side of the valuation scheme used by Texas
appraisal districts (CADs) is that it does not account for
the condition of individual properties or terms of a sale,
thus, property owners have the burden of providing
this information during the equalization or protest
phase each spring. Miss the May 1 st deadline and you
are on the hook for a higher tax bill until the following
year. Disagree with the CAD and you could end up in
arbitration or court.
What about your business property taxes? The
value of a business depends largely on the type and
its income producing potential. Income producing
properties (such as apartments, strip shopping centers
or office buildings) have an income potential and the
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net income is capitalized into a value (versus market
value based on sales). Businesses render or report
the value of the furniture, fixtures and equipment used
to conduct the business in addition to the inventory of
goods sold and on hand January 1 no later than April 1 st
each year. Failure to render will result in a 10% penalty
added to the tax already due.
Regardless of the property type, you have the ability
(and right and responsibility) to protest the value each
year. Success rates in Galveston County have been fairly
high for the 34% who bother to try. In 2017, 91% of the
34% reached an agreement with an appraiser and of
those who went to the Appraisal Review Board (ARB),
30% were reduced (this means
with 120,000 value increases,
40,800 protested, 37,128 of
those had a value reduction and
1,100 of the 3,672 that went to
ARB had a reduction or 94% who
bothered to try got relief).
Ultimately – it pays to protest.
If you don’t, you have NO chance
of lowering your property taxes,
confirming the adage that
government belongs to he or
she who shows up. Without a
doubt, protesting your value
is the most immediate form of
tax relief available and 100%
worth trying yourself (or hiring
a property tax consultant to do so for you). Beware,
however, that once hired, a tax agent represents you
until the relationship is formally cancelled.
Some, such as me, believe that being taxed based
on unrealized capital gains (with the value of your
home being determined by the marketplace rather
than your own actions) is unfair and have been working
to reform this system. With that said, Texas taxpayers
need to keep an eye on the 86th Legislative Session
currently underway. Whether the House and Senate
fumble the tax relief ball yet again or a Hail Mary Pass
to the end zone results in a win for 7.5 million Texas
homeowners – it will be a game to closely watch!
Do NOT be fooled by government cries that local
control is being eroded as this is nothing more than a
defensive blitz to stop taxpayers from scoring a victory.
Remember, you - the voters – are the ultimate local
control!