Ask The Tax Doctor: Does Living on a Busy Street Guarantee That My Property Taxes Will Be Lower?

Dear Tax Doctor: From reading the recent post, the one about the guy building a compound on Walnut Hill Lane, it seems that you can get a tax break from living on a busy street. Someone else also told me this recently. We want to lower our property tax burden and get a smaller house. I am told to buy one on a busy street (our kids are grown) to keep the property taxes down, but realize we may not see great appreciation in that busy of a location location. Is this true? How much can you save by buying on a busy, hustle bustle street? Thanks! – Traffic Cone Lover

Dear Traffic: When you check out DCAD, you will see that the properties fronting Walnut Hill are reduced 40% as compared to the land on the interior streets. Your first assumption may be that it is a “tax savings opportunity” to live on a busy street, but I would encourage you to think more broadly. It is true that there is a 40% reduction on that land, but why? Would you want to live on Walnut Hill Lane? What about Northwest Highway? If so, how much would you pay for it? Would traffic be a factor? Would size also be a factor? Would ISD also be a factor? It’s like living on Mockingbird without the HP ISD.

Ultimately, the land valuation per DCAD should be based on what people will pay for those lots on Walnut Hill. All in all, I feel that the total land value for the properties on DCAD seems about right. I do not think that those homeowners are getting a “tax break” by living there. Instead, I feel that their land is valued lower because it IS actually worth less.

If you are trying to downsize and are looking to be tax savvy, pay closer attention to the tax rates. Tax rates in the Dallas area range from about 2-2.8 percent. Buy a house in a lower tax rate area, and then you can correctly say that you are taking advantage of a “tax savings opportunity.”