Commercial property owners in Texas have a powerful but little-known remedy when facing substantial overvaluations: Section 25.25(d) of the Texas Property Tax Code.
This "last chance" provision allows property owners to correct significant appraisal errors even after missing the standard May 15th protest deadline, but it comes with specific requirements and a mandatory penalty.
What is Section 25.25 of the Texas Property Tax Code?
A common misconception is that once the May 15 protest deadline has passed, all opportunities for property tax relief for that year are lost.
While the window for a standard protest closes, the Texas Property Tax Code provides several limited but powerful remedies for correcting the appraisal roll after it has been certified. These mechanisms are consolidated within Section 25.25 of the code.
Section 25.25(d) Explained
The most beneficial and intriguing section is 25.25(d), which allows commercial properties that believe the county overassessed their property by 33% or more (or 20% or more for homesteaded properties) to protest this valuation by January 31 of the following assessment year.
This high one-third overvaluation bar exists because Section 25.25(d) is designed as an extraordinary remedy for substantial errors, not a routine alternative to timely protests. The provision acknowledges that significant valuation errors can occur and provides recourse when property owners discover these mistakes after the standard May deadlines have passed.
Determining if you qualify: Here's a simple test: Multiply the appraised value by 0.75. You qualify if your property's actual value is at or below that number. For example, you meet the threshold if your property is appraised at $3 million but is worth $2.25 million or less.
A Quick Checklist
Before you proceed, ensure you meet these strict requirements:
Massive Overvaluation: Does your property pass the one-third test?
No Prior Protest: You cannot have already had a formal protest hearing or signed a settlement agreement with the appraisal district for this tax year.
Taxes Paid: You must pay the undisputed portion of your taxes on time.
The Texas-Sized Opportunity
Our internal analysis of 2024 Texas commercial properties reveals a significant untapped opportunity for property tax relief through Section 25.25(d).
Noteworthy takeaways from non 25.25.(d) protestors in 2024:
Over 700 commercial properties qualified for 25.25(d) relief but didn’t file late protests.
The combined median estimated savings from 39 Texas counties was over $87 million.
Multi-family properties had the most to gain, with a median estimated savings of $110,700.
Below are the commercial property class types sorted by potential median estimated savings.
Property Class Type | Count No Protest | Median Potential Savings |
|---|---|---|
Lodging | 4 | $23,746 |
Retail | 36 | $25,178 |
Industrial | 66 | $32,287 |
General/Commercial | 384 | $50,711 |
Office | 75 | $56,113 |
Multi-Family | 172 | $110,699 |
The 2024 Success From 25.25(d) Protestors
Those who protested last year under the 25.25(d) statute achieved strong results. Below is a breakdown of the median reduction percentage when won by property classification.
Property Class Type | Count Won | Count Appeals | Median Reduction Percentage When Won |
|---|---|---|---|
Lodging | 150 | 164 | 15.8% |
Retail | 323 | 369 | 21.5% |
Industrial | 1,246 | 1,337 | 22.5% |
Multi-Family | 1,578 | 1,714 | 24.6% |
Office | 457 | 501 | 27.1% |
Other/Misc. | 2,793 | 3,197 | 28.7% |
Noteworthy takeaways successful 25.25(d) protestors in 2024:
There were 5,524 successful 25.25(d) appeals in 2024 with a 90% win rate.
When won, commercial property owners received a median reduction of 25.5%.
Outside of miscellaneous commercial properties, office owners and investors had the most significant median reduction percentage at 27.1% (when won).
Who Benefits Most From Section 25.25(d)
New Property Purchasers
If you purchase a commercial property after May 15, you've likely missed the standard protest deadline. Section 25.25(d) allows you to address any substantial overvaluation inherited from the previous owner, provided no formal protest with a hearing occurred earlier that year.
Complex Commercial Properties
Properties with intricate valuation methodologies often harbor substantial errors. Industrial facilities, special-use properties, and large commercial developments may have assessment mistakes that exceed the one-third threshold, making them prime candidates for relief.
The Administrative Process and 10% Penalty
A 25.25(d) protest is filed similarly to standard property tax protests but via a unique 50-230 form designated by the comptroller. Then, the ARB schedules a hearing for the property; there may be an informal process, but typically, county appraisal districts don’t have settlement offers on 25.25(d) appeals, and the ARB holds a hearing.
The 10% Penalty Explained
If you achieve more than a 25% reduction at the ARB hearing, a 10% late-corrrection penalty will apply to your new, corrected tax bill, not 10% of your savings.
Consider this example:
Original Tax Bill (on $4M value at 2.5% rate): $100,000
New Tax Bill (on $2.9M value at 2.5% rate): $72,500
Gross Savings: $27,500
10% Penalty (10% of $72,500): $7,250
Your Net Savings: $20,250
As you can see, despite the 10% penalty, many commercial property owners still achieve substantial net savings. However, it’s worth noting that many major counties, including Harris County, remove the 25% reduction threshold and the 10% tax penalty, which makes your late-correction protest a regular litigation.
Differentiating Your Property Tax Remedies
In Texas, there are multiple ways to protest your property taxes, depending on the error. Below are the four primary options for correcting the appraisal roll and their specific parameters:
Standard protest
25.25(c) motion
25.25(d) motion
25.25(h) motion
Remedy | Type of Error Covered | Filing Deadline | Lookback Period | Key Requirement | Penalty |
|---|---|---|---|---|---|
Chapter 41 (standard) protest | Market value, unequal appraisal, denial of exemptions, etc. | May 15 or 30 days after notice | Current tax year only | Timely filing of protest notice | None |
Section 25.25(c) | Clerical errors, multiple appraisals, non-existent property, and ownership errors | Within 5 years after Jan. 1 of the tax year | Up to 5 preceding years | Error must be one of the specific types listed (not a judgment error) | None |
Section 25.25(d) | Substantial error in appraised value (market or unequal) | January 31 of the following assessment year | Current tax year only | Value exceeds correct value by >33% commercialor >25% homestead | 10% of the corrected tax liability |
Section 25.25(h) | Error in appraised value | Before taxes become delinquent (typically Feb. 1) | Current tax year only | Joint motion between the property owner and the Chief Appraiser | None |
Don't Go It Alone: Why Expert Help is Crucial
Section 25.25(d) motions are not a DIY project; they’re complex legal maneuvers that require precise procedure and compelling evidence. You must meet the high valuation threshold and present an institutional-quality case, complete with proper market data and income analysis, to convince the ARB.
If you believe your commercial property has been overvalued by over a third, consult experts who live and breathe Texas property tax law.
Ownwell specializes in identifying and pursuing Section 25.25(d) opportunities for commercial property owners. Using proprietary technology, we:
Analyze property records to identify potential qualifiers
Handle all filing requirements
Represent owners through the hearing process
Understanding this powerful tool — and partnering with someone like Ownwell who knows when and how to use it — can translate to significant tax savings for savvy property owners.
Methodology
Data reflects 2024 Texas commercial property tax protests analyzed across over 40 counties, including actual ARB hearing outcomes for 25.25(d) appeals and appraised values from county records.
Potential savings were calculated by applying the median reduction percentage achieved by successful 25.25(d) protestors in each property class and market value band to the tax liability of similar non-protesting properties that met the 33% overvaluation threshold.
Lastly, estimates assume similar success rates and reduction percentages; actual results vary based on property-specific evidence and local ARB decisions. Analysis excludes properties with incomplete records or those in counties without accessible digital data.
Schedule time with Ownwell, today, and maximize your potential savings!
