Is Full Disclosure Coming? Austin Sues State Over Property Tax Appraisals

On Monday, the City of Austin filed suit against the Texas Comptroller's Office over the state's ad-valorem tax system.

On Monday, the City of Austin filed suit against the Texas Comptroller’s Office over the state’s ad-valorem tax system.

The end of sales price non-disclosure might be near, if the suit filed by the City of Austin against the Texas comptroller’s office is any indication. Austin Mayor Steve Adler, who submitted the 10-page suit on Monday, argued that the ad-valorem taxation system is unconstitutional because it isn’t “equal and uniform.”

Texas is one of the few states that, instead of relying for sales figures for tax purposes, employs an appraisal system. However, with skyrocketing values for residential properties in Travis County, commercial valuations haven’t grown nearly so much. It’s becoming a big problem, the suit suggests.

“The lack of sales disclosures has made it nearly impossible for appraisal districts to comply with their statutory and constitutional duty to assess all properties at market value so that taxation is equal and uniform,” the lawsuit states.

Texans have some of the highest property tax rates in the nation. Ad-valorem taxes make up about half of the state and local tax revenue, and are the sole source of funding for school districts. This has caused budget woes for schools, a problem that Texas has had for years (and likely for years to come).

Dick Lavine, chairman of the Travis appraisal district’s board of directors and a supporter of the lawsuit, compared the Austin suit to the school finance lawsuit headed to the Texas Supreme Court next month. Both seek court orders forcing the Legislature to tackle what critics view as inequities in the system.

“It’s really an attempt to have certain sections of the tax code declared unconstitutional,” said Lavine, who is also a senior fiscal analyst for the Center for Public Policy Priorities.

The staunchest critic of mandatory sales price disclosure is the Texas Association of Realtors, claiming that sales prices and property appraisals are two distinctly different values. When purchasing a property, certain “intangibles” come into play, said TAR Legislative Affairs Director Daniel Gonzalez in the Texas Tribune.

Tell us: What do you think about mandatory disclosure? Will it hurt the market? What about luxury transactions?

4 Comment

  • I support this 100%, especially because homeowners have been getting screwed for too long. We don’t have the same resources as commercial property owners to undervalue our property for tax purposes.

    This change will also help downtown redevelopment because it will punish landowners who sit on empty property (like a surface parking lot) content on waiting forever for the right offer because they’re not paying taxes on what the property is really worth.

  • It is bad manners to discuss what you pay for things!

    Texas may be a non-disclosure state right now but, you will play all kinds of heck getting a real estate agent/broker to allow nondisclosure at closing. I have always made the nondisclosure of sales price a condition of my contract and have been met with resistance. Then, you have to tell the real estate agents how to cancel the listing prior to closing in order to even be able to keep the information private. MLS listings default to force the disclosure of sales price.

    This information really should not be public knowledge. Some things should remain private.

  • Well non-disclosure of sales price was a good tool to use for flipping a property that was purchaed at wholesale pricing; in order to not be used in “market value” pricing for premium listings. I can certainly attest to other premium properties not disclosed at sale, due to having to pay fair Ad-valorem. All parties must agree in writing to non-disclose. There are many homeowners in Dallas cheating the system that is for sure. Again it is a needed tool for investment reasons so to not devalue properties that have already been updated. This nonsense about hiding your ACTUAL sales price to avoid fair taxiation is a slap in the faces of all those whom do pay fair Ad-valorem taxes. If everyone paid their fair share, taxes would decrease.

  • Where I think the biggest change would come into play is with commercial property owners, who are paying way too little in many cases, and whose tax bills are many multiples of those of the average homeowner.