Complaints about skyrocketing property tax bills are nothing new, but few people take the time to find out exactly what goes into that number. For many, fighting property taxes has not been a priority because they could ultimately write-off the amount on their income taxes. That changes this year.

Under the guidelines of the Tax Cuts and Jobs Act that was passed at the end of 2017, write-offs are now capped at $10,000. In Dallas County, that’s about the average tax bill of a home valued at $450,000.

“I don’t think a lot of people understand that and they are going to be shocked this year,” local entrepreneur and Allie Beth Allman & Associates agent Stephen White said. (more…)

By Lydia Blair
Special Contributor

A reader writes: “I bought a home in 2018 and my taxes are escrowed by my mortgage company. How do I get a homestead exemption to get a discount on my taxes? Do I need to repeat the process every year? How much does it save me?”

You most definitely want to know how to file for a homestead exemption for your 2019 property taxes. To get a homestead exemption, you must own and live in the property as your principal residence as of Jan. 1 of that tax year. So, if you purchased in 2018, you may apply for that exemption after Jan. 1, 2019.

A homestead exemption removes part of your home’s value from taxation, so it lowers your taxes. I don’t know the details about your home to tell you how much a homestead exemption can save on your property taxes, but it is generally about 20 percent. Given the property tax rates in Texas, it is worth the few minutes it takes.  

To qualify, your home must also be owned by you as an individual (or individuals). A corporation or other business entity doesn’t qualify for this exemption. Do not pay someone else to do this for you. It is free and you can do it online in a few minutes.

Here is a step-by-step guide for how to apply for a homestead exemption in the DFW area:

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Dallas ISD's Board of Trustees voted Thursday to OK the purchase of 9400 N. Central Expressway. (Photo: Bethany Erickson)

Dallas ISD’s Board of Trustees voted Thursday to OK the purchase of 9400 N. Central Expressway. (Photo: Bethany Erickson)

As you’ve probably read by now, the Dallas Independent School District’s Board of Trustees voted 5-3 last night to purchase the building at 9400 N. Central Expressway in a bid to consolidate the district’s various departments that are currently spread all over Dallas County.

We can debate the merits of having a building where hundreds of employees will be able to work under one roof for the first time in probably more than 50 years, but that was done for quite some time last night.

Instead, I’d like to talk about something else that came to light (actually, I’ve heard the confusion from many a homeowner about this time every year, too) at this meeting — folks don’t know there’s a difference between the appraisal value Dallas County Appraisal District uses for taxation, and a fair market value appraisal. (more…)

Courtesy of PhotoBucket

Courtesy of PhotoBucket

Get caught up and read part one of Jon Anderson’s Property Tax series here.

Tax Dodging 101

Every Realtor I have asked has completely agreed with this statement, “The more expensive a home, the less accurate DCAD’s valuations are.”  The translation here is that the wealthier you are, the more able you are to pay taxes but the less likely you are to be paying your share.

And why not cheat?  We read almost daily of some large corporation relocating to Ireland to dodge taxes in what’s called a “Double Irish With A Dutch Sandwich” or the likes of Google’s outrageous UK deal to settle a ten-year tax dispute for a measly £130 million based on profits of £7.2 billion. Why not the little guy too?

We have become a society where given a choice, too many will take a shortcut when offered.

There are three components that abet property tax shortcuts.

  1. Non-disclosure
  2. DCAD inefficiency
  3. Tax challenges

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Grandwick 3 JoEngland

You already know that Grandwick, the former Dallas headquarters of the Church of Scientology, was reduced to ashes by a three-alarm fire Thursday. The owner, David D. Anderson, said that he was unable to obtain insurance on the property because it was vacant.

It would seem like this is a tragic, singular occurrence, but the truth is that Anderson owns several homes throughout east and southern Dallas, and many of them are vacant, overgrown, and generally eyesores.

In total, Anderson, who also owns two music stores in the area, has 23 residential properties in Dallas County according to records pulled from the Dallas County Appraisal District website. Of those 23 properties, four are rated “Unsound,” seven are rated “Poor,” and seven are rated “Fair.” Only five are rated either “Average” or “Good.” Grandwick, which is considered a commercial property, is not rated using the same system.

David Anderson East Dallas Properties

According to an official with DCAD, a property that is rated “Poor” often has more than a few code violations, the most common of which is peeling paint, overgrown landscaping, broken windows, as well as some structural issues. An “Unsound” property is often considered unfit for occupation, with serious structural issues, boarded up windows, along with a significant number of code violations.

Grandwick 2 JoEngland

A firefighter whose station responded to the blaze at Grandwick said that while they are unsure what caused the blaze that reduced the stucco-clad 1950s Spanish estate to a pile of rubble, Anderson told firefighters he suspects students from nearby Gaston Middle School. It’s a popular theory, especially considering the number of nearby residents who complain of vandalism and graffiti, as well as the previous 911 calls to Grandwick after break-ins.

So, if a property is sitting vacant and is a magnet for vandals, why not sell it to someone who could put the time and money into refurbishing it? It’s a good question, especially since vacant properties are many times more likely to be broken into and suffer catastrophic damage.

A neighbor to one of Anderson’s East Dallas homes in Forest Hills said that he visits his property at 8310 Forest Hills Blvd. regularly, but doesn’t live there. According to DCAD, this is the home Anderson uses as his primary address. The neighbor, who declined to be identified, didn’t think Anderson was acquiring all these properties just to let them rot, though. Instead, she said Anderson was amassing an estate for his daughter to inherit.

8310 Forest Hills 3 JoEngland8310 Forest Hills Blvd. is rated in “Poor” condition.

It kind of makes sense, but wouldn’t his daughter benefit more from property that is properly maintained? For example, 8310 Forest Hills Blvd. is rated in “Poor” condition by DCAD. On the flip side, Anderson bought his daughter Belle Nora at 8254 Garland Road, just a few blocks from his Forest Hills Boulevard home, for her 16th birthday. Since then, though, it’s sat empty save for Christmas dinner last year.

After reports from passers by and Forest Hills residents that the property wasn’t being maintained, we asked Realtor Vicki White if she had heard anything adverse about Belle Nora. In a Jan. 28 email, White said that while Anderson wanted to move into the stately mansion overlooking White Rock Lake, he couldn’t move his parents there, who are in poor health.

“He does own several houses, and some of them are in disrepair,” White added. “I don’t think that’s the case with Belle Nora.”

However, since that date, much of the property has become overgrown, and the wrought-iron fence facing White Rock Lake has been held together with some nylon rope for months, rusting without repair. It is rated in “Average” condition by DCAD.

Belle Nora Fence

Is it a pattern of neglect, or is it a property owner spread too thin? As Anderson’s Forest Hills neighbor claims, he’s spending much of his time with his ailing parents, and only visits other homes. She called the fire at Grandwick “a tragedy,” too.

But for some people who have visited his Garland Road music store, they say it’s a pattern of disorganized neglect. Patrons and East Dallas residents have likened the store to a hoarder’s home, with stacks and piles of equipment and very little concern for the structure or contents.

We tried to contact Anderson for this story, but our calls were not returned before deadline. Our attempts to contact Anderson at two different nearby Zoo Music locations were not returned. 

1608 Crest Ridge JoEnglandThe home at 1608 Crest Ridge is considered “Unsound” by DCAD.

 

Core Logic ForeclosuresSo D’Ann Petersen told Sheryl Jean at the Dallas Morning News that home prices are rising so fast in North Texas, she’s tempted to sell her house. D’Ann Petersen is a business economist for the Federal Reserve Bank of Dallas.

My question for her is this: if you sell, where would you go? Inventory is so low in Dallas, you almost have to jump on Hip Pockets or what I call “Pre-Sales” to buy a home.  What with lean inventories, low interest rates, decent job growth and way fewer distressed sales, the Dallas market is almost, almost back to the Golden Days.

Yeah, it’s great out there: Dallas-area single-family home values rose 7 percent in January from a year earlier, according to Standard & Poor’s/Case-Shiller latest Home Price Index. Those are the gloom and doom peeps, if you recall, so when Bob Shiller says it’s good, like an 11th straight monthly gain, it’s very good. Remember, Case-Shiller only tracks re-sales of existing homes, not new home construction, or anything going vertical from the likes of Darling Homes or other large homebuilders, condos or townhomes. So the sale of Tim Headington’s condo? Not included.

According to David Blitzer, managing director of S&P Dow Jones Indices, we are back to fall 2003 levels when it comes to values.

I wonder what hemlines were doing in 2003?

The news was really good for all 20 metropolitan areas in Case-Shiller’s index. Phoenix killed it with a 23 percent increase, since Phoenix was a poster child of declining values in 2007 to 2011. Eight metro areas — Atlanta, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, Phoenix and San Francisco — reported double-digit gains. The rest, including Dallas, rose in the 7 to 8 percent vicinity. U.S. residential shadow inventory — the stuff hiding in the wings to be unloaded on the market –fell 18 percent in January from a year ago, this in CoreLogic’s report earlier this week. Local foreclosures are all but gone: Steve Brown reported that 1.2 percent of Dallas-area homes with mortgages were in foreclosure last month, down slightly from a year ago. And CoreLogic estimates that 11,118 Dallas-area homes have gone through foreclosure in the 12 months ending with February. Most of those are in the peripheral areas of Dallas.

Like they used to say about General Motors, what’s good for housing is great for the U.S. economy. With mortgage balances up for 1.7 million homeowners, housing wealth has grown by $1.4 trillion and is drivings consumer spending. Taxes, too: don’t think the Dallas County Appraisal District and it’s nether cousins won’t be all over these price increases.

The Dallas Fed also reported this week that Texas manufacturing and service indexes showed a pickup in activity in March. U.S. single-family housing starts are still anemic, rising 0.8 percent in February after a decline in January, but my CandysDirt Approved home builders tell me that is about to change.

Petersen said “some of my contacts said builders want to build as fast as they can but they’re limited by some labor issues.” Well, it’s not just that all the labor packed up and left during the greatest recession since the Great Depression, but it is incredibly hard to find lots! Any home builder who picked up dirt during the bust is sitting pretty, and my guys tell me that once they go vertical, the homes are snapped up. Lots are increasing in price, too, along with housing prices making it all just more expensive.

I’m telling you: inflation, here we come.

 

 

Troy Aikman has sold part of his dirt, the pool-cabana-sport court part, and we are hearing tales of multiple offers and homes being snapped up in 4 to 5 days, some not even in MLS. I am posting a home soon built by Mark Danuser that sold as a hip pocket in less than a week. Never hit MLS. Our marketing is heating up, so what does this mean to the folks down at the Dallas County Appraisal District? Has anyone even heard from their Appraisal District?

DCAD and the surrounding counties kicked off the beginning of the property tax season May 1 with the release of the “2012 Proposed Value” for all properties within their jurisdiction.

According to our Tax Doctor, Tiffany Hamil, here’s how to figure out your new Proposed Value: The District will mail you a notice if your value increases, but they are not required to mail you a notice if the value is reduced or stays the same. So no news is good news, sort of.

To find out your new Proposed Value, you should visit your local county’s website.

Dallas: www.dcad.org

Collin: www.collincad.org

Tarrant: www.tad.org

Denton: www.dentoncad.org (values will be released on May 9th)

How to know if you should protest? There are several factors to consider in determining if you should protest, says Tiffany:

1. The Fair Market Value of Your Home. Does the District’s appraised value of your home seem higher than what you could sell your home for? To save time and money, the Appraisal District uses a mass appraisal system based on “typical” property values to appraise ALL the properties in each class. By protesting, you are requiring the Appraisal District to individually appraise your home.

2. The Appraised Value of Your Neighbors’ Homes. Does the District’s appraised value of your home seem higher than your neighbors?

3. Your Age. If you or your spouse are nearing age 65, you should strongly consider protesting. At the age of 65, you qualify for the “Over-65 Exemption,” which will set a tax ceiling on your total school taxes for your residential homestead. It’s important that the ceiling be as low as possible because it can’t ever be changed.

Hire someone or I represent myself? Like with any area of law, you can always represent yourself. That said, there is always an advantage to hiring a professional to assist you with your property tax protest, and the tax savings usually covers the fee. A professional will have experience working with the Appraisal Districts, and their experience and knowledge will allow them to formulate persuasive arguments to successfully lower your value.

Knowing the rules of the game, says Tiffany, is half the battle in this area of law.

 

 

 

 

 

 

photo by Dallas Morning News David Woo

I may have told you that the Dallas Country Club sued the Dallas County Appraisal District earlier this year, claiming that the District has over-valued its lush 118 acres, which, as we all know, are located in a neighborhood of blue chip homes. The case is pending. DCAD put the value of the Dallas Country Club’s property over there on posh Beverly Drive at nearly $13.8 million, up about ten million dollars from a $3.5 appraisal last year. Sure got their attention. DCAD figured that with DCC’s new $27 million renovation, the land might be a bit more valuable, right? DCC did what every non-profit, non-tax paying blue-blooded American club aimed at keeping its dues low would do: it sued the Appraisal District.

In fact, the DCC, like most commercial property owners, has been suing to lower taxes for ten years.

The Dallas Morning News earlier this month reported that, (subscription req.) through an open records request,  DCC has shaved more than $15 million off the value of its Beverly Drive property during the past decade through court settlements in SIX lawsuits.

Yikes! The current lawsuit is DCC’s seventh. In each lawsuit, guess what happened? The appraisal district backed off its original value and agreed to a lower amount, reducing the club’s property tax bill. For those who do sue, it’s a battle worth fighting.

But what the article didn’t tell you is this: most of the land that DCC sits on could never be used to develop multi-million dollar Highland Park homes: it’s on a greenbelt.

I checked with veteran property tax consultant Don Walker, who’s firm, Donald C. Walker & Associates, Inc., has been going to bat for homeowners and private clubs for years. He told me about the greenbelt. He also told me lawsuits are fairly typical in the state of Texas on commercial properties as well as golf courses.  Thousands of lawsuits are filed each year as a remedy for excessive values after an ARB hearing.  Quite simply, most property owners are interested in minimizing their taxes, and in Texas lawsuits are the only way to accomplish that. Hec, one year even I sued. Walker’s firm currently represents Bent Tree, Northwood, Preston Trails, and Prestonwood, and has filed 2011 lawsuits. 

As far as valuing the real estate of  private country clubs, confusion reigns, says Walker, like knowing that DCC sits on a greenbelt that cannot be developed. So, who would buy it? Generally, private clubs don’t sell for their real estate value.  If a sale occurred, a large part of the sale price would be attributable to membership fees and monthly dues.  And those items are generally considered “business value” and are NOT assessable as real estate. 

“Remember,” he told me, “you are attempting to value just the real estate, not the business entity.”

In the Dallas Morning News piece, an “outside expert” from the Aassociation of Appraisal Districts was quoted as saying that recurrent lawsuits show “that the process of determining property values is highly subjective and is more so in Texas than most other states.” No duh:

“Texas is one of very, very few states that does not have some form of disclosure of property sales prices,” said Sands Stiefer, president of the Texas Association of Appraisal Districts. “If we had the data, we would be able to come up with a much more accurate value.”

We’ve had this discussion before on DallasDirt: Texas is a non-disclosure state. When you sell a property, buyers can “Z” out the selling price to keep DCAD from taxing on the full sales price. Without the sales price reported, Texas appraisers determine land values using whatever data is available, often last listing price.

That tends to work against homeowners with average priced homes, say under $1.5 million, and in favor of commercial property owners. Why? Because there are more lower-priced properties to use as comparisons. And many million dollar property sales are non-disclosed. As for commercial, virtually every commercial property owner has deep enough pockets to sue over values. And when you sue, DCAD tends to settle because of the sheer volume of the lawsuits. In fact, the News reports that the number of protests over residential property in Dallas is declining, from 69,693 in 2002 to 53,093 in 2011, while the number of protests by commercial owners is on the rise. Commercial protests have increased from 20,298 in 2002 to 24,390 this year.

That is actually interesting, because values went up significantly from 2002 to 2008. Last year, of course, was a down market, most Dallas homes have depreciated in value.

This I did not know: the Texas legislature launched a pilot program to put more appraisal disputes into the hands of administrative law judges, rather than district courts, for properties valued at $1 million or more. Not sure if this will be available in Dallas County, but it is available in 11 Texas counties. The goal is to remove some of the costs associated with protracted legal battles, at least for appraisal districts.