Dallas/Fort Worth (DFW) has been one the fastest-growing and desirable real estate markets in the country since we came out of the Great Recession of 2008/2009. Unfortunately, DFW is experiencing the harmful impacts of the COVID-19 “shelter-in-place” orders, resulting in high unemployment and catastrophic losses for hotel owners, retailers, restaurants, and many other businesses. This has put the DFW area chief appraisers in a very tough situation.
2020 Property Tax Deadlines Extended
Dallas Central Appraisal District (CAD) has extended the April 30, 2020 deadline to file Freeport Exemptions until June 15, 2020. The Business Personal Property filing deadline has been extended from April 15 to May 15. Collin County CAD extended the Agricultural Land Exemption filing deadline from April 30 until June 1, 2020. Value notices will be mailed May 15 in Collin County and Dallas County. Tarrant County issued notices on May 1, 2020. Denton County CAD got most values out on time (approximately April 30, 2020). Therefore, protest deadlines are June 15 in Collin County and Dallas County, while Denton County’s is 30 days from the mailing of notices, most of which will fall on May 29. Tarrant County’s protest deadline could be as late as June 1, 2020.
2020 Protest Process
All across Texas, appraisal districts are gearing up to handle Appraisal Review Board hearings by phone or Zoom technology. Taxpayers continue to have the right to be heard through affidavit as well. All the major counties and their appraisers will be working informally right up to the hearing date, just like any other year. While the counties are publicly stating that COVID-19 is a 2021 issue for valuation purposes, Ryan plans on presenting the real-world issues as they exist. Rent abatements, declines in revenue, vacancies, co-tenancy issues, debt covenant violations, and a modified outlook as a result of COVID-19 cannot be ignored in 2020. These arguments will be difficult, as taxing jurisdictions are already hurting from other lost sources of tax revenue. Appraisals generally lag market variations by 12 to 18 months as data points become available over time. That being said, an aggressive approach to value reductions this year is paramount to ensuring you pay no more than the law allows. Remember it’s COVID-19, not COVID-20.
Possible Texas Property Tax Exemption for COVID-19 Damage (From Ryan Tax Alert issued April 17, 2020)
Ryan is exploring potential property tax relief as a result of harm caused by COVID-19 to real and business personal property in Texas. Under newly enacted Texas Tax Code § 11.35, taxpayers suffering damage to their property caused by a governor-declared disaster may receive a temporary exemption from a portion of their property tax liability. This exemption is allowed for property that has suffered at least 15% damage caused by a disaster and applies proportionately to property tax liabilities.
Relief is not certain. The Texas Attorney General recently issued an Opinion stating diminution of market value does not qualify a property for relief under Tex. Tax Code § 11.35. The Opinion interpreted the word “damage” in the statute to mean physical property damage. Staff of the Texas House of Representatives Ways & Means Committee previously issued a similar statement.
However, the Attorney General’s Opinion and the House Ways & Means Committee staff’s statement are not binding on courts. There is a plausible argument the text of Tex. Tax Code § 11.35 does not require physical damage to property to trigger the exemption. It is likely appraisal districts will deny the exemption, and such denials will be upheld by appraisal review boards. Yet Texas Tax Code § 11.35 is new. How courts, subsequent to such denials, will interpret it is uncertain.
Ryan’s Property Tax and Advocacy teams will closely monitor developments throughout this process and continually report on any activities or changes. We will be consulting with our clients on the best strategy, considering each client’s unique circumstances, maximizing their relief under all Texas administrative, litigation, and appeal remedies. Our current advice is to protect your rights to due process and file for the exemption no later than June 26 (deadline).
In the interim, please reference our COVID-19 site for updates.
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The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at firstname.lastname@example.org.