The acronym CAD in real estate property valuation stands for Central Appraisal District. This local government entity is responsible for determining the value of property for tax purposes. The CAD performs annual appraisals on all taxable real estate and business personal property within its jurisdiction. Its primary function is to establish a fair and uniform appraised value, which serves as the foundation for calculating local property tax bills.
Defining the Central Appraisal District
The Central Appraisal District is a county-level political subdivision created to centralize the property tax valuation process for all local taxing jurisdictions. Its geographical scope aligns with county lines, and it operates separately from the county government. The district provides a single, unified appraisal value for each property, eliminating the confusion that arose when multiple taxing bodies conducted separate valuations.
The CAD is not a taxing entity; it does not set tax rates, collect payments, or determine how revenue is spent. Its role is strictly to appraise property and administer exemptions, compiling an official appraisal roll. Local taxing entities, including cities, counties, and school districts, rely on the CAD’s certified values to calculate the property tax due from each owner.
How Property Value is Determined
Property valuation by the CAD uses a process called mass appraisal, which systematically values a large number of properties as of a specific date, typically January 1st. This approach is necessary because the district must appraise every property annually, often amounting to hundreds of thousands of parcels. The CAD collects extensive data on all properties, including physical characteristics, location, and recent sales information.
Appraisers use three standardized approaches to estimate value in a mass appraisal system. The sales comparison approach is most common for residential real estate, analyzing sale prices of similar, recently sold properties. The cost approach is used for newer or unique properties, estimating the replacement cost, subtracting depreciation, and adding land value. For income-producing properties, the income approach converts the property’s anticipated net operating income into a value estimate using capitalization rates.
Appraisal Value Versus Market Value
The CAD’s appraised value is the official determination used for property tax purposes, while market value represents what a property would sell for on the open market. Although the CAD is legally required to appraise property at its fair market value as of January 1st, these two values frequently differ due to legal limitations. This divergence is most noticeable for residential homestead properties, which benefit from a valuation cap.
Once a property qualifies for a homestead exemption, the increase in its appraised value is limited by state law, often to no more than 10% per year. This limitation creates a “taxable value” that may be significantly lower than the true market value in areas experiencing rapid appreciation. The cap applies only to the value used to calculate property taxes, not the market value itself. Consequently, the appraised value for a long-time homestead owner can lag substantially behind the price a buyer would pay in a competitive transaction.
Connecting Appraisal Value to Property Taxes
The CAD’s appraised value provides the base figure local governing bodies use to calculate a property owner’s tax liability. After the CAD certifies the appraisal roll, each taxing entity, such as a school district or city, determines its annual budget and sets a corresponding tax rate. This rate is often expressed as a dollar amount per $100 of taxable value.
The formula for calculating property tax liability uses the CAD’s appraised value after exemptions are applied. A homestead exemption, for instance, reduces the appraised value to arrive at the net taxable value. The calculation is (Taxable Value / 100) multiplied by the tax rate set by the taxing entity. Since a single property is typically within multiple taxing entities, the total property tax bill is the sum of the liabilities calculated by each jurisdiction.
Appealing Your Property Value
Property owners who believe their CAD-determined appraised value is incorrect or unequal have the right to appeal the valuation through a defined, multi-step process. The first step involves filing a formal Notice of Protest with the Central Appraisal District by a specific deadline, usually May 15th or within 30 days of receiving the Notice of Appraised Value. Filing this protest initiates the review process and is a prerequisite for any further appeal.
Following the protest, the property owner is offered an informal review to meet with a CAD appraiser to discuss the valuation and attempt to reach a settlement. This meeting allows the owner to present evidence, such as comparable sales data, recent professional appraisals, or estimates for necessary repairs. If an agreement is not reached during the informal review, the property owner can proceed to the formal hearing.
The formal hearing takes place before the Appraisal Review Board (ARB), an independent panel of private citizens authorized to resolve valuation disputes. During the hearing, both the property owner and the CAD appraiser present evidence to the ARB, which then makes a binding decision on the property’s value. Property owners should focus on providing solid evidence that the CAD’s value exceeds the market value or that the property is appraised unequally compared to similar nearby properties.
Structure and Authority of the Central Appraisal District
The Central Appraisal District is overseen by a Board of Directors, whose members are typically appointed by the governing bodies of the taxing entities. This board’s authority is limited to administrative functions, such as hiring the Chief Appraiser, adopting the annual budget, and setting general policies. The Board of Directors does not have the power to appraise property or influence the values set on individual parcels.
The Chief Appraiser is the district’s chief administrator, managing the staff and ensuring all properties are appraised according to state law. Separate from the CAD is the Appraisal Review Board (ARB), an independent body that serves as the final administrative authority for property owner protests. The ARB acts as a neutral third party, hearing evidence from both the property owner and the CAD before issuing a final determination on the property’s value.