Property Tax Appraisals In Your Mailbox but Never Fear: The Tax Doctor Is In!

May means great weather, less sneezing, and, in North Texas Real Estate parlance, time to grit our teeth over home appraisals. Property tax appraisals went out Friday, so this coming week we should be getting the hard, cold news about property taxes. Dallas rates have gone up. Property values have gone down. Will the Appraisal District reflect this in our bills or look the other way to sop up much-needed revenue?

Do you anticipate your property taxes will go up or down?

Couple things: Jim Schutze over at the Dallas Observer had an interesting article this week on taxes, and the mayoral candidate’s rhetoric that we need to expand the business tax base in Dallas. For what? (To lower our property taxes is the assumption, I guess.) Schutze was another journalist getting hoarse shouting, for the 300,000th time, the inequity that the property tax burden in Texas weighs on the shoulders of homeowners rather than commercial property — I agree:

“What is this crap about the importance of attracting more businesses to the city? They throw it out like a line from the Bible or something — especially mayoral candidates Mike Rawlings and Ron Natinsky. Got to “grow that tax base.” Only way we can grow that tax base is by attracting more businesses, they say.”

The real growth in this city in the last 10 years, he says, has been in residential, which has risen almost 65 percent. Commercial real estate values are up only 31 percent. In 2000, he says, residential was 40 percent of the total tax base. In 2010, it was 47 percent.

“Part of the problem with commercial, of course is that the values at which commercial properties are taxed are often substantially below market values. For whatever reasons (and I think I know what some of them are), the Dallas Central Appraisal District seems to like to low ball commercial values.”

I have long wondered why the tax base has not improved from the flourishing, expanding downtown. The reason is that commercial real estate pays less in taxes. Some argue they should, because businesses use fewer city services — which is news to me. Last time I looked, business created way more waste. But apparently this year, commercial is going to see rates go up.

According to the Dallas County Appraisal District, about 12 percent of residential property values will increase this year, very similar to last year,  according to spokesperson Cheryl Jordan via the Dallas Morning News. But oh boy get ready: more commercial properties will increase in value this year than last. Last year, 4,500 commercial properties had value increases, and this year that number will jump to 22,135.

DCAD anticipates just 23 percent of residential properties will lose value, compared with 34 percent last year.

So you know what that means: our Tax Doctor is back! Tiffany Hamil Mackey will be here to answer your questions as you get your tax bill. I was talking to her last night about what she thinks is coming down the pike, and she thinks the city may decrease land values while increasing improvements to keep appraisals the same. In other words, if your property is valued at $500,000 with $100,000 on improvement and $400,000 on land value, she thinks that they will reduce land to $200,000, but increase improvement value to $300,000 to preserve revenue. This means that the total value of your home goes unchanged, but suddenly your improvement just increased in value 300% in one year?!??! Who’s playing games here?¬† She‚Äôs already noticed whole blocks of areas in Preston Hollow subject to this exact situation.

Even if your taxes have stayed the same, Tiffany says you should fight. So get ready, the Tax Doctor is IN!

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  • Tiffany, DCCD reduced land values and increased improvements in the Park Cities last year because the builders are out of the market here so land values actually did go down. They lowered land but increased improvements so there was little if any net effect. Most people did not pay attention to DCAD playing with the numbers because their value did not change or went down. When the residential market comes back, DCAD will increase the land values back and there will be a big overall increase.

    • Yes, I agree with you Stan. Because most people only look at total value, they will not realize the change. Ultimately, this really hurts individuals who own "tear down" properties. All of the a sudden their poor condition home previously worth $30,000 is now worth $230,000.

      But, you should know that the District didn't voluntarily lower land values. This was a result of litigation from last year. Ever been in an ARB hearing and tried to argue land? If so, you will know that you were speaking to deaf ears. The ARBs rarely, if ever, decrease land values. I would go as far as saying never because I've never seen it happen. In order to lower land, you must litigate. I know personally that two homes in this area were litigated last year as I participated in both. We argued both on land and had the land reduced to $390k. The District HAD to respond or else they would be setting themselves up for easy equity arguments. So, this was they way they responded. Homeowners should be on the lookout. Their solution isn't proper, especially for homeowners with tear down homes.

      • Tiffany,
        Can you protest a 2011 valuation on a substantive residential improvement value increase on an old home to offset a land decrease (the 2011 value is the same as 2010). No change in valuation from 2011 to 2010, but there's no way the 2010 residential improvement was correct.

        • Bruce,

          Absolutely. This is the exact situation that I am seeing in the Preston Hollow area. The District has had to lower land values, but in order to keep revenues high, they have correspondingly increased the improvement value. You should protest this! The District is playing games, and the taxpayers that really suffer are those with the older homes in need of work.

  • Tiffany, DCCD reduced land values and increased improvements in the Park Cities last year because the builders are out of the market here so land values actually did go down. They lowered land but increased improvements so there was little if any net effect. Most people did not pay attention to DCAD playing with the numbers because their value did not change or went down. When the residential market comes back, DCAD will increase the land values back and there will be a big overall increase.

    • Yes, I agree with you Stan. Because most people only look at total value, they will not realize the change. Ultimately, this really hurts individuals who own "tear down" properties. All of the a sudden their poor condition home previously worth $30,000 is now worth $230,000.

      But, you should know that the District didn't voluntarily lower land values. This was a result of litigation from last year. Ever been in an ARB hearing and tried to argue land? If so, you will know that you were speaking to deaf ears. The ARBs rarely, if ever, decrease land values. I would go as far as saying never because I've never seen it happen. In order to lower land, you must litigate. I know personally that two homes in this area were litigated last year as I participated in both. We argued both on land and had the land reduced to $390k. The District HAD to respond or else they would be setting themselves up for easy equity arguments. So, this was they way they responded. Homeowners should be on the lookout. Their solution isn't proper, especially for homeowners with tear down homes.

      • Tiffany,
        Can you protest a 2011 valuation on a substantive residential improvement value increase on an old home to offset a land decrease (the 2011 value is the same as 2010). No change in valuation from 2011 to 2010, but there's no way the 2010 residential improvement was correct.

        • Bruce,

          Absolutely. This is the exact situation that I am seeing in the Preston Hollow area. The District has had to lower land values, but in order to keep revenues high, they have correspondingly increased the improvement value. You should protest this! The District is playing games, and the taxpayers that really suffer are those with the older homes in need of work.

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