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Subsidized Housing Valuation Challenges? Get Expert Insights to Overcome Them!

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Valuation Of Subsidized Housing The purpose of this article is to analyze valuation methodology for several atypical types of apartments. Various circumstances and

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situations can cause an apartment complex to have above-or belowmarket rental rates, occupancy rates and operating expenses. This analysis examines the following two situations:

1. low-income subsidized apartments, which receive above-market rental rates from HUD or another government agency, and

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2. projects that are part of the Low Income Housing Tax Credit (LIHTC) program.

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The LIHTC program was established by the U.S. Congress to encourage development of

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affordable housing in economically disadvantaged areas. Project developers receive a tax credit for following the guidelines established by the program. They typically sell these credits to

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Fortune 500 corporations for 45 percent to 60 percent of the total project cost, excluding land. The first step in the valuation process is analyzing market value definitions. The following is the definition from the Texas Property Tax Code, Section 1.04 (7): market value means the price at

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which a property would transfer for cash or its equivalent under prevailing market conditions if: 1. exposed for sale in the open market with a reasonable time for the seller to find a purchaser, 2. both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions to its use, and 3. both the seller and the purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other. Section (b) of the Texas Property Tax Code further requires: the market value of property shall be determined by the application of generally accepted appraisal techniques, and the same or similar appraisal techniques shall be used in appraising the same or similar kinds of property. However, each property shall be appraised based upon the individual characteristics that affect the property’s market value. The definition of market value, according to the 10th edition of The Appraisal of Real Estate published in 1992 by the Appraisal Institute, is: market value is the most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress. The term which requires further review in the above definition is “knowledgeably.” Is the purchaser knowledgeable regarding the effort required to comply with subsidized housing program requirements and tenants? Does he consider the effort to be rent for real estate or compensation for services? Does the purchaser of an LIHTC project understand that maximum rents are now established for at least 15 years based on deed restrictions? (LIHTC deed restrictions are now required for 30 years in Texas and most other states.) Fee simple estate is defined in the third edition of the Dictionary of Real Estate Appraisal published by the Appraisal Institute as: absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat.

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 2025 Protest: Applies to the majority of Texas property owners whose 2024 value notice from the county is dated more than 30 days ago and the date is past May 15, 2024.

 2024 Protest: Applies to select Texas property owners where the 2024 value notice is dated LESS than 30 days ago. Call 713.290.9700 to discuss with a representative. Please monitor your E-mail and spam filter. If you don't receive your enrollment documents within 24 business hours, call 713.290.9700 8am - 5pm CST

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