collier

Houston businessman and Democrat Mike Collier filed at 1 p.m. Monday to run against incumbent Lt. Gov. Dan Patrick (Photo courtesy Mike Collier).

Mike Collier knows that there are people that care deeply about whether Texas stays red, turns blue, or goes purple — but it’s not his chief goal.

“My aspiration is political competition,” he said on a drive from Houston to Dallas last week. “I just want to see the end of this one-party system.”

Collier filed today to run as a Democrat against incumbent Lt. Gov. Dan Patrick and said he knows that running for a statewide seat as anything other than a Republican can be seen to some as a bit quixotic.

But is it really? The Houston businessman may have seemed like a long shot when he first announced he was considering a run several months ago, but recent successes this month in other GOP stronghold areas has made the whole prospect less far-fetched.

Collier said his platform’s foundation is in two intersecting areas — public education and property taxes. For an hour, CandysDirt.com engaged in a question and answer session with the candidate. Below are some of his responses. (more…)

Why Property Taxes are so BAD

Last weekend, the National Association of Real Estate Editors (NAREE) awarded this series discussing state and local property taxes “Bronze” in their Best Series category.  While originally published in May 2016, a year later nothing has alleviated our property tax increases. 

Several weeks ago I wrote a pair of columns (here and here) about how the core math of Texas property taxes is fundamentally broken (and always has been).  While, A+B=C, if “A” is patently wrong, how can “B” and “C” be accurate?

In this case, “A” is assessed property value, “B” is property tax rate and “C” is the revenue required to run the city and state.  In Texas, without real estate transaction disclosure, “A” is always a bit of a crapshoot as DCAD pulls assessed values out of thin air.  Now I’m sure there’s some enormous algorithm they use to calculate values (a bottle of Jack, a blindfold and a dart board?) but in the end, not having access to the actual selling prices of real estate in Texas hamstrings a meaningful conversation about taxation rates.

As it is, property tax assessment districts in Texas have higher rates (“B”) than are actually needed because they have no visibility into “A” valuations.  Texas rates are high because the underlying assessed values are inaccurate.

Yesterday, the Dallas Morning News outlined how this year’s rate increases hit middle-income homes harder than higher income homes.  Color me shocked!  And yet, the middle class are just as vocal about keeping Texas’ system of non-disclosure in place.

(more…)

lowes

The next time you walk into Lowe’s and they ask if they can help you, you might say, “Yeah, pay your fair share.”

Big-box retailers are trying a new-fangled strategy to lower their property taxes, and in some states, it is working.

It’s called the “dark-store” strategy, borrowing a commercial real estate term that means a vacated building that has “gone dark”. This strategy has been used successfully used by some stores to cut local property taxes in Michigan and other states.

Now, it is being tested in at least four Texas counties. That’s where Lowe’s home improvement stores are challenging tax bills. Their arguments are that the property should be valued as if the buildings sat empty.

But they are not: the stores in Bexar, Harris, Hunt, and Taylor counties, are wide open.

Confusing? It’s a way to bully the tax authorities with the store’s sheer size. Hey, they argue: this building is big (and cheap) and it would be really hard to fill if we left. So if you want us to stay and pay something, then lower our taxes.

We haven’t seen this in North Texas thus far, but you know how good news travels fast in the business world.

If these stores are granted huge tax deductions, guess who would be forced to cough up the difference?

Homeowners.

“I do think that this is something that needs to be watched,” says our Tax Doctor Rob Wheelock.

Property taxes are going to be a big topic in Texas 2017.

“Next year the Texas lawmakers, lead by State Senator Paul Bettencourt, will be taking up property tax reform in hopes of closing some of the current loop holes,” says Rob. “I can’t blame any property owner, residential or commercial,  for keeping a watchful eye on their values and protesting if they believe that the valuations is too high.”

Especially if giants like Lowe’s and Home Depot start ditching their fair share. (more…)

Dallas ISD will likely ask voters to approve a 13-cent property tax increase in November, its first in almost a decade. (Photo by Flickr/Stuart Pilbrow

Dallas ISD will likely ask voters to approve a 13-cent property tax increase in November, its first in almost a decade. (Photo by Flickr/Stuart Pilbrow)

Hooboy. I’ve gotten some heated emails about the Dallas Independent School District’s announcement that it would be asking voters for a 13-cent increase in property taxes come November.

And I get it. But I also think that many of the folks that emailed me, or that I’ve seen railing against it on social media, have only read the headline. Why do I think this?

Because frankly, all they know is that it’s going up. They can’t tell you how much. They can’t tell me how the measure will be structured. They can’t even tell me if the current rate is too high, or too low.

So it’s clear we need to unpack this. If you want some excellent reasons and information, Eric Celeste and Corbett Smith have already outlined quite a bit. And let me say upfront that as a homeowner, I’m not too jazzed about my bill going up. But as I’ve said elsewhere while hiding in my car from my family while recording a podcast, education is infrastructure. And we have to start treating it like infrastructure.

I know we just passed a bond. But if you do or don’t recall, many felt that bond election should’ve included a small tax increase then, to expand pre-K. It didn’t, because people felt that if a tax was attached, people would vote no on the whole thing.

But if you read no other paragraph than this, read this one: You do not have to vote yes for the entire 13-cent increase. Yes, everyone that knows what’s going on in Dallas ISD would like and hope you do vote for it. But three proposals will go to the voters: a 5-cent increase to fund pre-K expansion, a 4-cent increase to increase the college prep program that will ensure that more district graduates graduate with two years of free college under their belts, and a 4-cent increase to fund teacher pay increases and incentives for some of the district’s best educators that agree to go some of the district’s lowest-performing schools.  Again, that totals 13 cents. But you don’t have to vote yes for all of it (but seriously, you should). (more…)

Screen Shot 2016-06-01 at 12.31.40 AM

Update, 4:09 pm: there IS a good, well, a very bad reason why John Ames had such a low appraisal: his home burned down! Details coming up.

I love our Dallas County Tax Assessor John R. Ames, I really do. I’ve met him, I voted for him, just love the guy. I think he’s doing a great job down at the tax office. Plus I think he’d be really fun at a party.

But I want to know, what’s in the secret appraisal sauce down there? John lives in DeSoto, in a darling circa mid 80’s house on a cul de sac. It’s 30 years old, 5199 square feet, and in very poor condition.

(Let’s face it: all our homes are in very poor condition, right? My dishwashers just broke, and I just found rotted wood from all this rain. This house is going to hell in a Louis Vuitton handbag.)

Last year his house was appraised at $254,380.

This year it’s appraised at $177,270.

In 2015 his land was $36,000, improvement was $218,380. Proposed for 2016 is land at $36,000 holding steady there but improvement is down at $141,270.

I mean Zillow, a real estate gawking site that is always off — wait — did you see where Zillow founder Spencer Rascoff’s former home sold for way less than the Zestimate?

On February 29, Rascoff sold a Seattle home for $1.05 million, 40 percent less than the Zestimate of $1.75 million shown on its property page a day later.

The gap between the Zestimate of Rascoff’s former property and its sales price has decreased only modestly since then.

Zillow readily acknowledges that Zestimates can be inaccurate, but some consumers can still take them at face value, causing headaches for agents.

Thank God because  Zillow has John’s house “zestimated” at $298,373.

That’s completely ridiculous but let me tell you: I think DeSoto is John’s secret sauce — DeSoto here I come!

 

Why Property Taxes are so BAD

Why Property Taxes are so BAD

Several weeks ago I wrote a pair of columns (here and here) about how the core math of Texas property taxes is fundamentally broken (and always has been).  While, A+B=C, if “A” is patently wrong, how can “B” and “C” be accurate?

In this case, “A” is assessed property value, “B” is property tax rate and “C” is the revenue required to run the city and state.  In Texas, without real estate transaction disclosure, “A” is always a bit of a crapshoot as DCAD pulls assessed values out of thin air.  Now I’m sure there’s some enormous algorithm they use to calculate values (a bottle of Jack, a blindfold and a dart board?) but in the end, not having access to the actual selling prices of real estate in Texas hamstrings a meaningful conversation about taxation rates.

As it is, property tax assessment districts in Texas have higher rates (“B”) than are actually needed because they have no visibility into “A” valuations.  Texas rates are high because the underlying assessed values are inaccurate.

Yesterday, the Dallas Morning News outlined how this year’s rate increases hit middle-income homes harder than higher income homes.  Color me shocked!  And yet, the middle class are just as vocal about keeping Texas’ system of non-disclosure in place.

For me, this is the most salient paragraph …

“Local officials say they are hamstrung by state law in trying to accurately assess commercial and high-end residential properties. Texas, unlike most other states, doesn’t require real estate sales prices to be publicly disclosed. Property owners who can afford pricey Realtors often demand nondisclosure agreements. State law also permits property owners who successfully challenge their appraisals to collect attorneys’ fees from the county.”

If non-disclosure died, here’s what would happen…

First, the state would take 3 to 5 years to change the system.  During that time, the state taxation districts would rebuild their databases of assessed values based on transactions occurring during that window.  From there, the state would reverse engineer the taxation rate.  If the state needs $X and property is worth $X, what rate gets us to that level?  Hint … it’s a rate a HELL of lot lower than it is today.

For example …

A $200,000 home taxed at today’s homestead rate of ~2.3 percent equated to $4,600 per year in property taxes.  But let’s say that home is really worth $310,000 … then the tax rate would only need to be 1.5 percent to reach the same $4,600 in annual property taxes.

I hear you saying … “If, after this exercise homeowners still pay about the same, what’s the point?”

(more…)

taxchartYour tax appraisals are supposed to be in the mail today, which means we will all be drinking a lot tomorrow.

“The average increase for almost every homeowner will be around 14%, is what we have heard,” says our Tax Doctor, Rob Wheelock.

Why?

“Look at Case-Shiller and sales, look at what you have been writing,” said Rob. “Values are up overall,  including commercial, which might even get hit heavier than residential.”

What can you do besides buy enough booze today before the limit on your credit card is limited? I’d get a licensed tax professional to review your property value against comparative sales (“comps”) and equity. Can’t do that, call your Realtor for help. Or write us here at CandysDirt.com.

Oh, and don’t look at Zillow lest you get laughed out of the tax office. (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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