Estimating Tax Future Property Tax Liabilities
There are four things to consider in projecting tax liabilities for future years.
1. Estimate the timing of future revaluations and appeals.
2. Projected increases in future tax rates.
3. Legislative changes.
4. National Economy.
It is very important to forecast county reappraisals due to up-ticks in sales activity, market rents and occupancies. Additionally based on historic trends predict if tax rates will decline, remain flat or increase.
Any tax estimate must ask two very important questions:
- • Will the property owner use tax consultants to exhaust their Administrative Remedy?
- • Will the taxpayer seek further relief through Judicial Review?
The last two factors are very difficult to predict:
Legislative changes: The Texas Legislative is and has been under great pressure to pass legislation modeled after California’s Proposition 13. The “Cap Legislation” would revamp the manner in which property taxes are administered in Texas. Essentially this procedure would cap valuation increase at 2% per year and revaluation would be limited to when properties are sold. In my opinion one may give some weight to this possibility in the future.
National Economy: Obviously any changes in the national economy would affect future valuations. The latest example of this would be the 2008 recession where we saw values generally decline in 2009 and 2010.