Texas has no state income tax. That’s the headline everyone leads with when they’re selling you on investing here. What they don’t mention in the same breath is property tax. In some Texas counties, you’re paying 2.5% to 3% of assessed value annually. On a $400,000 property, that’s $10,000 to $12,000 a year — before insurance, maintenance, or debt service.

And here’s the part that matters: the assessed value is not necessarily what you paid for the property, and it’s not necessarily what the property is actually worth in the current market. The appraisal district makes an estimate. You have the right to challenge it. Most investors never do.

I do it every year, across every property in my Texas portfolio.

How the Process Works

In Texas, each county has an Appraisal Review Board (ARB). Every spring, you receive a Notice of Appraised Value. If you disagree with the valuation, you file a protest. The deadline is typically May 15th or 30 days after you receive the notice, whichever is later.

The protest can be done informally — you submit comparable sales data showing that similar properties sold for less than your assessed value — or formally, with a hearing in front of the ARB. Most of my protests are resolved informally.

What Evidence Works

The strongest evidence is recent comparable sales. Pull three to five properties similar to yours — same neighbourhood, similar size, similar condition — that sold in the last six to twelve months at prices below your assessed value. Present this to the appraisal district. They’d rather settle than hold a hearing.

I’ve also had success using the income approach on rental properties: showing the actual net operating income of the property and the cap rate implied by the assessed value, then demonstrating that the implied cap rate is inconsistent with the local market.

What It’s Worth

On a portfolio of ten or more properties, a successful tax protest cycle can reduce your annual tax bill by $15,000 to $40,000. That’s not theory — that’s what I’ve seen across our San Antonio and Austin holdings. In a market where cap rates are compressed and every dollar of NOI matters, this is not optional. It’s part of asset management.

The counties I actively protest in: Travis, Bexar, Hays, and Williamson. Each has its own ARB calendar and its own tendencies. Learn your county’s process specifically — it matters.

If you’re investing in Texas and you’re not protesting, you’re leaving money on the table that someone else is collecting.