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Why Use A Tax Consultant – Real Estate

Reasons To Thoroughly Evaluate Your Personal Property Assessments.


Everyone in the industry has a basic understanding of the traditional approaches to market value. However, it’s the nuances of these techniques and how they are utilized to formulate the most effective property tax appeal strategy.

Benefits of Using a Tax Consultant

  • Timing of presentation to Appraisal District.
  • Comparing Final Values versus Notice Values.
  • Understanding of how the process works and knowing the appraisers on more of a personal level.
  • Working with senior appraisers that have more decision making authority versus less experienced appraisers.

3 Steps to the Appeal Process

  1. Informal Hearing. Where Consultants attempt to settle “informally”. Most appraisal districts make a good faith effort to reduce many protests at the informal meeting. This is successful 90% +/- of the time. Approximate timeframe: April 20 – July 1.
  2. Formally. Through the Appraisal Review Board (ARB). Typically the more respected consultants have hearing dates that are usually later in the process allowing them to compare “settled” values vs. comparing to “notice” vales. Results can vary depending on the board members at your hearing. Approximate timeframe: June 25 – July 10.
  3. (a) Judicially. With a lawsuit. You must file within 60 days of receipt of ARB value. Appraisal Districts are highly reluctant to take a market value or an equity case to court. Almost all cases that end up in court are a result of a law or a procedural situation. Success rate is high when settling a value during this process. Approximate timeframe: October – January.(b) Arbitration. Must file within 45 days of receipt of ARB value and overall value must be less than $5 million. Results are binding and if taxpayer is successful, minimal cost involved. This appeal process will become more prevalent as the maximum value has now been increased to $5 million. 

Income Capitalization Approach

This is the most common valuation approach utilized by appraisal districts in a mass appraisal of multi-family properties. The basic elements of this approach include: estimating the potential gross income on a stabilized basis; estimating a proper allowance for vacancy and collection loss; estimating anticipated fixed and variable operating expenses (including a reserve for replacement of depreciable components); and capitalizing the income stream into an indication of value by using market-derived capitalization

CMI-Income-Capitalization-ApproachThe data necessary to complete the preceding steps is delineated on the appraisal district’s commercial worksheet as follows:

  • Potential Gross Income (PGI)
  • Vacancy Allowance (%)
  • Operating Expense Ratio (%)
  • Net Operating Income (NOI)
  • Capitalization Rate (OAR)

The impact of these assumptions on the resulting value indication plays a crucial role in understanding the appraisal district’s value position. For this reason, Cantrell McCulloch obtains a digital version of the appraisal district’s commercial worksheets and exports the data to a proprietary software application for comparison to the subject’s actual operating history.

The unique insight gained from this data provides a benchmark from which all negotiations begin. It not only identifies inaccuracies relative to the subject’s actual operating performance, but also allows us to seek common ground on any appraisal district assumptions deemed favorable to our client’s tax position.

Uniform and Equal Protest

Allows for value corrections to be made “if the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted.” When a recent sale has occurred, this often is the only line of defense in the appeal process. If a conflict exists between taxation at market value and equal and uniform taxation, equal and uniform taxation prevails. The uniform and equal protest puts taxpayers on equal footing regardless of market value or sale price.

Are Property Taxes Eroding Your Profits?

Property taxes have become one of the most significant factors affecting the profitability, operations, marketing and ultimately, the value of commercial real estate and business personal property. In fact, property taxes are the largest expense item.
We can help minimize your tax burden and enhance the value of your assets. Call Us Today at (214) 368-5566, ext. 338