Property Damage Repairs and Tax Reductions: What You Need To Know
Evidence of property damage or deferred maintenance is one of the most effective ways to reduce your property taxes. If your property sustained damage in the past year from extreme weather, accidents, flooding, fire, aging, or other cause, Ownwell can use this damage to strengthen your case for a property tax appeal. This article covers how property damage can impact your property taxes and what steps you can take to maximize your property tax reduction potential.
What repairs are eligible?
The first step is to determine which repairs are eligible for a reduction. In order to qualify, the damage must be present during the previous fiscal year and some sort of repairs must be necessary due to the damage caused. This means that cosmetic repairs, or repairs done to improve the appearance of the property, would not be likely to strengthen your case. Repairs from damage or maintenance of the property to maintain a safe habitable residence are ideal. While repairs and replacements influence the appraised value of your property, not all repairs will result in a reduction in the assessed value of your property. We have the most success with repairs or maintenance projects that cost over $1,000.
When it comes to filing an appeal, the more evidence you can supply showing the necessity of the repairs, the more likely you are to be successful. For example, repairs to foundations or quality-of-living items such as boilers, heaters, or AC units are generally more likely to be effective than chipped paint, or a weathered fence. The line between necessary repairs and proactive replacement can be subjective. Consequently, you’ll want to factor in the importance of these repairs in regards to the structural integrity and habitability of the property, as well as the economic lifespan of any appliances you’re repairing or replacing.
If your property damage was caused by a natural disaster, like a hurricane or tornado, there are special programs in place to help you lower your property taxes. On some occasions, you can qualify for government relief due to homelessness or displacement from natural disasters. For example, in the state of Texas Tax Code Section 11.35 provides property owners who have experienced 15% or more damage due to a disaster the ability to receive temporary exemptions on their appraisal value. Depending on the percentage of damage estimated by the chief appraiser, properties can get a 15% to 100% exemption on their appraised value. In the case of Tax Code Section 11.35, to qualify for a potential exemption, property owners must apply for this exemption within 105 days of a disaster as declared by the Governor. For non disaster exempt properties, the scope of repairs that qualify as potential causes for reductions depend on your county. If you’re unsure whether your repairs would qualify for relief, you may want to reach out to a local tax property tax consultant or your County Appraisal District for guidance.
What is the process for documenting repairs?
If your home has sustained damage you can either get a quote from a local contractor or file a claim with your home insurance provider. If you file a claim with your insurance company they will likely send out an adjuster to assess the damage. In the absence of a quote from a contractor or estimate of repairs from an adjuster, photographs of the damage is the next best evidence to argue for a tax reduction. The insurance report, quotes or estimates for repairs, and photos can all be used as documentation for your property tax reduction appeal. The more evidence the more compelling your claim.
If your home has sustained major damage, it is even more important to have multiple pieces of evidence (quotes, photos, insurance reports) to help justify a larger reduction.
What should be documented?
Documentation is very important to support your claim. If you have any physical evidence of the damage, take pictures and keep them with your records. This might include:
- Estimates, Quotes, or invoices for repairs
- Photos of the damaged property
- Insurance adjuster’s report
Remember to keep a detailed account of all correspondence with your insurance company, repair contractor, and county appraiser’s office. This includes letters, emails, and phone calls. Be sure to note the date of each communication, what was discussed, and the name of the person you spoke with. This can help reinforce your claims that the damage occurred before the new fiscal year and that the pricing of these repairs are accurate for the timespan in which your property’s value was being appraised.
As mentioned, pictures of the damaged property are very useful. These can be used as evidence to show the severity of the damage and the scope of repairs needed. Before making any repairs, take plenty of photos of the damage from different angles. When building an appeal you ideally want to have more evidence than you think you’ll need. This will provide you with more flexibility when it comes to addressing the County’s evidence during your appeal.
It’s also a good idea to get multiple estimates for repair work before you start making repairs. When sourcing quotes, make sure to get estimates for multiple types of material, including different quality levels, as well as varying labor demands for the repair. This will provide you with a cost estimate range of repairs and will help with your negotiation with the county appraisal district. Be sure to keep all estimates, quotes, and receipts for all potential and completed work to help strengthen your case.
Once repairs are underway, keep a careful record of all expenses. This includes things like building materials, contractor fees, and permits. Be sure to save all receipts and invoices. This will be important when it comes time to protest your appraisal, as well as when you need to file your taxes.
How can damage reduce a property’s taxable assessment?
After filing an appeal and compiling all photographs, estimates, and reports detailing the property damage, it is time to communicate this information to the County Appraisal District. If a representative from the Appraisal District has not yet reached out to discuss the value of your property, you may do so by calling their office and asking where you should submit the evidence documenting the property damage.
Alternatively, a professional property tax consultant can help you organize your damage documentation and present it in the best light possible with the county assessor’s office. Ownwell’s team of local experts have in-depth knowledge of the types of damage bills and evidence that are likely to result in the highest savings. Let Ownwell file your protest and you’ll pay just 25% of whatever we save you, with no upfront commitment or hidden fees. Check out our tax savings estimate tool to see how much you could save today.