AUSTIN, Texas — Appraisal districts will temporarily reduce property tax base if you have damage from the recent winter storm.
Minimum damage is 15% of the property’s improvement value.
The tax reduction will only be in place until the property is reappraised.
The deadline to apply is May 28.
Q&A with Marya Crigler, chief appraiser, Travis Central Appraisal District
Erica Proffer: “Tell me about this tax relief. Is this something that automatically happens?”
Marya Crigler: “The disaster exemption is something that was brand new. It was adopted by the legislature and by the citizens of Texas in 2019. This is the first real disaster that we've had that has physical damage that the exemption would actually apply to. So, this is the first time that we will be implementing the exemption.
“It is an automatic exemption, but you have to meet the qualifications in order to get the exemption. The qualification requirements are that it must be a piece of qualified property. The legislature has defined "qualified property" as being business, personal property, which is the inventory, equipment and furniture of a business. It is an improvement to the real property, which would be the structures, both residential and commercial. But it's actually only the structure. It is not the land, but the buildings. And then certain types of qualified mobile homes that are used for residential dwellings are all qualified property.
“In addition to that, the property must be at minimum, 15% damaged. So, if they meet those qualifications, they can submit an application to the appraisal district to get the exemption. They do have to submit an application and the deadline to file the application is May 28.”
Proffer: “Because it's a structural thing, this doesn't apply for agriculture use? Let's say some of your animals were hurt or your crops, anything like that, it wouldn't apply?”
Crigler: “No. The legislature was very specific in the types of qualified property that the exemption would apply to, and it's looking at the physical structures on the land. So, if they had a barn that was damaged. They could get the exemption for the barn, but not for the crops.”
Proffer: “Help me understand this calculation. It looks very complicated.”
Crigler: “It is. When property owners go online and file their applications online, we do have a calculator that comes up and helps them. But it's a multi-step process that the legislature has outlined for us.
“The first thing that the appraisal district has to do is, we have to determine if they meet the minimum qualifications. What we'll do is, we will look at their cost estimates to repair their damage and divide that by the value of their improvement. So, for example, if $46,000 was their cost to repair in their building, improvement was valued at $230,000. Then $46,000 is 20% of $230,000. They would meet the qualifications because they meet the minimum 15%.
“The levels of assessment, damage assessment that we can make, there are four levels that the legislature has given us. There's a level one if you're 15-30% damage, a level two if you're 30-60% damage, level three if you're 60% to less than 100% damage, and then a level four, which is 100% total loss. So, if you are a level one and you get to have at least 15% damage, you get a 15% exemption. Level two gets a 30% exemption and level three gets a 60% exemption. And then level four is 100% exemption because it's a total loss.
“So we will first calculate, are you qualified? Do you meet that? And then, based on that percentage that's calculated, what level assessment do you get? And then the last calculation that it has to do is multiply your improvement value times the percentage allowed for that level to determine your exemption amount. Then, that gets prorated based on the number of years remaining in the year. So, in this instance, it's about 88% that we would apply a number of days, yet a number of days remaining in the year.
“Because the exemption disaster was declared on Feb. 12, there's 322 days remaining. So, 322 divided by 365 comes out to approximately .88.”
Proffer: “Because taxes are sent out in October, how is that factored in?”
Crigler: “Property owners will, if they make the application and do it before the deadline to file the application, which is May 28, they will get the exemption. This will happen regardless of whether they've made their repairs or not. If you had damage and you submit your documentation and your supporting documentation about your cost of repair, you will qualify for the exemption and you will get the exemptions, even though you may have already repaired the damage that you've had to your property. Then taxes don't get collected until next year. This goes towards your tax bill for 2021, which will be mailed out in October.”
Proffer: “What if they have damage now, they get approved and it's fixed and reassessed?”
Crigler: “We know our appraisal date is Jan. 1. We won't reappraise the property until the following Jan. 1. The timing on this is a little complicated because we're still developing our 2021 appraisal roll, and we haven't sent our notices of appraised value. But any exemption that they get will be applied towards their 2021 value for their 2021 taxes won't be reappraised. The exemption won't fall off until the following year.”
Proffer: “What if they're in a protest right now. Does that impact it?”
Crigler: “Well, we haven't sent out notices of appraised value yet, so property owners aren't protesting 2021 yet.”
“What they would be protesting right this minute would be the 2020 taxes. Most of those have been resolved. We've got a few that are outstanding, but most of those have been already resolved.
“We have not yet started our 2021 protests because we haven't sent our notices of appraised value out. Those don't go out until April.
Proffer: “What if somebody is protesting, let's say in May. Let's say they got approved in April or here in March, and then they're protesting in May. Does that impact the exemption that they would receive? Would it go off of the settlement if it ends in their favor? How is that factored in?”
Crigler: “So if a property owner files a protest this year, they've got to be protesting the market value. The impact of the disaster is not reflected in our appraisals because our appraisals are as of Jan. 1. So, they can't protest that they had storm damage and get their market value reduced because the storm happened after the assessment date.
“What they can do if they want to get relief because of that damage, they can submit the application for disaster exemption relief. If they qualify, they can get that. But you cannot protest and get a reduction because of disaster, because of the storm damage in a protest, because that, again, happened after the Jan. 1 assessment date.”
Proffer: “I see. So, that calculation, when you're looking at that first step of the calculation that would be going off in January 2021?”
Crigler: “We will be looking at our 2021 appraised values to make that damage assessment. As the applications come in, we are finalizing our 2021 roll. We'll have that information when we start processing the applications to make that damage assessment.”
Proffer: “So essentially, whatever you get in April, that's going to be the basis of the percentage.”
Crigler: “Yes, that is correct.
“It's really complicated, and the timing of it makes it super, super complicated. But it is some relief for property owners that have had substantial damage, and it'll give them some tax relief.”
Proffer: “What if I already made repairs, or what if I’m in the middle of making repairs? Do I have to have the damage when I'm applying?”
Crigler: “No. As long as the damage occurred and it was as the result of the winter storm, you can still get the exemption even if you've made your repairs.”
Proffer: “Does it impact the homestead exemption or anything else?”
Crigler: “No, it would not impact any other exemptions that you may be entitled to.”
Proffer: “When I finish, what if it brings up my value from what it was before the damage?”
Crigler: “Your repairs that you do won't affect your market value unless you do something extraordinary, like you're adding additional square footage. Or, since I have this damage, I'm going to add a swimming pool or something new that you didn't have before. Again, our assessment, our appraisal is Jan. 1, 2021. Your property was whole at that point. When we do our next appraisal if you made your damage repairs, your property is still whole. It’s not any different. We're just going to continue to appraise your property as we would normally. It should not cause an increase in your market value because you did repairs.”
Proffer: “I know that in normal years you can't get everybody to physically do a reappraisal. Does this mean that you will be going by each person who applies?”
Crigler: “At this time, we are not going to. We don't have the capacity to go to each property when they submit their application. We're going to depend on the property owners to give us their cost to repair estimates and provide their supporting documentation. We'll be making our assessments based on the information that they provide us. There will be some that we will be able to go out and do an inspection on, but we're not going to have the capacity to go out and visit every property.”
Proffer: “Are you going to go only to the 100% [damaged] or is it going to be varied? How are you going to make that determination?”
Crigler: “It will be varied. It really will depend upon what the taxpayer submitted, their supporting documentation. Those that provide us with a lot of good supporting documentation, there's less of a need for us to go out and do an inspection to verify that information.”
Proffer: “My understanding is for normal exemptions, like homestead, I have until April 30 to file. This May 28?”
Crigler: “Yes, the legislature has defined that property owners have 105 days after the date the governor declared the disaster to file their application for the exemption.
“So, 105 days after Feb. 12 lands on May 28.”
Proffer: “Is this going to impact you doing your roles on July 25?”
Crigler: “Our certification date is July 25. We're encouraging property owners to submit their applications online. That helps us process them more speedily. It should not impact our ability to certify our appraisals and get our certified estimates out to our taxing entities by July 25.”
Proffer: “Anything I'm missing? My goal of this is really to help homeowners understand if it's worth it. Should I go to the Travis Central Appraisal District and let them know I have damage. Is it going to save me, or will it bite me in the end? What would you say to those folks?”
Crigler: “I would say there is a requirement that you have to have the minimum amount of damage. That has to be 15% that the legislature said. That's a pretty high threshold. Some people may have had some damage, but they may not make that 15%. It really is about property owners understanding what their cost of repair is, what their improvement value is. Using that calculator that we put with our application will tell them pretty quickly whether or not you've got enough damage to qualify for the exemption or not. If you do, we give you a rough estimate of how much that exemption would be worth to you. But again, we encourage them to go online and utilize our online application because it's got that calculator built into it.”
Proffer: “And you may have answered this for me. Is this something that automatically kicked in or did you have to open this up for the people of Travis County?”
Crigler: “The governor declared a disaster in all 254 counties in the state. It's applicable across the state to every county, every property owner, as long as they need the qualifications. There is nothing discretionary that the chief appraiser does to invoke the disaster exemption. Again, it's by state law and we're just following state law, but we want to make sure property owners are aware of it since it's such a new exemption. We want to make sure that everybody's aware that it's available to them. If they qualify, we want them to be able to take advantage of it.”
Proffer: “Anything else that I may be missing? You hear questions on your end.”
Crigler: “No, I think the biggest thing to stress is, one, that requirement – that 15% requirement, so that they understand that. Again, if I only had one pipe burst and it'll cost me $500 to fix, I'm not going to qualify for the exemption.
“The other thing is really understanding that there is a deadline to submit your application. To get your application in as quickly as you can. May 28 is the deadline to submit the application. We've got an online version of it to make it easier for property owners to complete the application, upload their evidence. Then, that calculator helps them calculate so they can understand whether they might qualify for the exemption.”
Proffer: “Is the exemption, the 15% or more, for out-of-pocket costs? What if insurance covered my costs?”
Crigler: “Even if insurance covered your cost, that is the damage and the cost of repairs. Even if it was covered by insurance, you can still claim the exemption.”
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