where do the "early thirties professionals" live? (Bryan: rent, insurance)

[MOD220]

its every third year here in Chicago, but I'm confused looking at homes in Dallas. I've seen two houses, both $899k, one had $16k and the other was $27k for 2010. these were both Park City area, and unless one had a huge collapse in value, not sure how there is such variance?

[TurtleCreek80]

Originally Posted by MOD220

how often do they reasses values for tax purposes? I've seen some houses that are at a $900k asking price, but $27k a year in taxes! nearly 3% and who knows what the sale price will be. tax assesors seems to notice markets that move up, then overlook market downturns...

You also have the right to protest your taxable value each year. It seems like the majority of homeowners > $750k will go protest and take sold comps, photos, etc as "evidence". This is met with varying degrees of success. Our old home had a pool (according to DCAD), so my father took lighted of our pool-less backyard and got the value lowered. Always verify the tax roll details (square footage, number of beds & baths, pools, etc) are correct.

Also, check the address on Dallas Central Appraisal District to see what exemptions are being claimed- if it's not the owner's primary residence, taxes would be about 25% higher than with the 20% homestead exemption factored in.

[TurtleCreek80]

Originally Posted by MOD220

its every third year here in Chicago, but I'm confused looking at homes in Dallas. I've seen two houses, both $899k, one had $16k and the other was $27k for 2010. these were both Park City area, and unless one had a huge collapse in value, not sure how there is such variance?

$16k sound about right for an $899k home. Remember that list price and taxable value are two different things. It's possible the $27k taxes home WAS once valued closer to $1.7M, especially if it was a builder spec home and the builder has been sitting on it for a year or longer.

[TurtleCreek80]

Pet peeve correction: Park City is in Utah. Highland Park and University Park are jointly referred to as the Park Cities.

Also, thought of one more reason for the tax difference- does the address of the $27k tax home start with a "7" instead of a 2, 3, or 4? If so, it is in the part of HpISD that is in the city of Dallas (as opposed to being in the town of HP or UP) and thus is subject to much higher taxes- closer to 2.3%. so then the home would have originally listed at $1.2-1.3M, and being at $899k now makes more sense.

[lh_newbie]

Originally Posted by lakehighlands

Properties are required by law to be appraised at least once every three years for property tax purposes. In popular/high end areas, expect to see the properties reappraised more often.

Correct, but a little more detail: yearly cap for tax appraisal increase is 10% per year, or 30% in a 3 year period. You will receive a tax appraisal every year, regardless of whether it has changed and you can dispute it then - simply taking your closing papers, showing the sales price is sufficient to lower your tax appraisal. You can see the appraisal district's calendar here: http://www.dcad.org/Calendar.aspx

Call me cynical, but if you're questioning 3% taxes on a 900K home... should you really be buying a 900K home? Following the rule of thumb for home value of 2.5x your salary, you should be earning $360K/year. I'd LOVE to make that much, but even if I did, I would personally have a hard time spending any more than $500K on a home as I'm laser focused on retiring early. (I know different strokes for different folks, but I do try to provide encouragement to look at different thought processes even if you decide mine aren't for you)

Brian

[MOD220]

Originally Posted by lh_newbie

Correct, but a little more detail: yearly cap for tax appraisal increase is 10% per year, or 30% in a 3 year period. You will receive a tax appraisal every year, regardless of whether it has changed and you can dispute it then - simply taking your closing papers, showing the sales price is sufficient to lower your tax appraisal. You can see the appraisal district's calendar here: DCAD: Calendar

Call me cynical, but if you're questioning 3% taxes on a 900K home... should you really be buying a 900K home? Following the rule of thumb for home value of 2.5x your salary, you should be earning $360K/year. I'd LOVE to make that much, but even if I did, I would personally have a hard time spending any more than $500K on a home as I'm laser focused on retiring early. (I know different strokes for different folks, but I do try to provide encouragement to look at different thought processes even if you decide mine aren't for you)

Brian

not worried about the $900k purchase price, but am concerned about taxes. a home is an asset, that can increase in value, property taxes on the other hand, are not an asset. so if i spent an extra $300k on a house, I hope over time I'll get it back + appreciation. if i pay an extra $300k in property taxes, its $300k gone forever. make sense?

its not all about affordability, practicality has a place in this analysis as well.

[lh_newbie]

Originally Posted by MOD220

not worried about the $900k purchase price, but am concerned about taxes. a home is an asset, that can increase in value, property taxes on the other hand, are not an asset. so if i spent an extra $300k on a house, I hope over time I'll get it back + appreciation. if i pay an extra $300k in property taxes, its $300k gone forever. make sense?

its not all about affordability, practicality has a place in this analysis as well.

A home you live in is technically not an asset. A home you rent (and make profit) is though. I've never subscribed to the home = asset because it will appreciate theory. Maybe I've lived in DFW too long. Home appreciation here isn't a given, but taxes are. I prefer to diversify my investments outside of real estate - especially real estate that I live in.

Brian

[galore]

Originally Posted by MOD220

if i pay an extra $300k in property taxes, its $300k gone forever. make sense?

its not all about affordability, practicality has a place in this analysis as well.

It's gone. Poof. Vanished.

The reason why you can get a mansion for cheap here is that they don't appreciate much in value. Not even in the Park Cities, compared to the popular cities on the coasts.

It's not impossible to make money on houses in Dallas but I believe it's the exception, not the rule here.

[MOD220]

Originally Posted by lh_newbie

A home you live in is technically not an asset. A home you rent (and make profit) is though. I've never subscribed to the home = asset because it will appreciate theory. Maybe I've lived in DFW too long. Home appreciation here isn't a given, but taxes are. I prefer to diversify my investments outside of real estate - especially real estate that I live in.

Brian

I own rentals and I have commercial real estate investments, in addition to the traditional stock/bond portfolio, but I strongly believe the home is an asset. it shows up on your balance sheet, its collateral for a mortgage, and over any 30 year period, it will go up in value. very few people buy a home, pay it off, and don't make money on the property, even in DFW I'm sure. that said, it can't be ones "only" asset and can't be bought purely with "other" people's money and work out well (see 2007-current).

my point is simply that money going to taxes is gone forever, while money going to the purchase of a house should not be, hence the great concern over tax money than purchase price of a home.

[TurtleCreek80]

Originally Posted by galore

It's gone. Poof. Vanished.

The reason why you can get a mansion for cheap here is that they don't appreciate much in value. Not even in the Park Cities, compared to the popular cities on the coasts.

It's not impossible to make money on houses in Dallas but I believe it's the exception, not the rule here.

Two counter-points:
1. Property taxes are an "asset" of sorts. You HAVE to pay them wherever you end up buying, but in the Park Cities, it pays for a private school quality education. Try to find a private school where you could educate your future family of 3 for either $16k or $27k per year. They don't exist- not even the Catholic schools are $6-9k per year per child....and you still would have to pay property taxes somewhere on top of tuition. If you have 2+ kids, HPISD is the way to go for an excellent top-notch education and facilities.

2. Other than 2008-2010, the Park Cities have steadily climbed in value for decades. My great-aunt bought her home for $50k in the late 1950's and we sold it for $1.3M when she died in 2009. My parents first home (paid $40k in 1979) just sold this year - in a depressed economy- for $950k-ish. My friends who just closed on the $899k home in UP from owners who bought in 2005- those people are still walking away with a little over $100k (in 5 years, including the $200k or so in value the home "lost" since 2008).

It is practically the only safe real estate bet in DFW- for the sole sake of the schools. There are only so many homes in HPISD- most of the last apartments have been demolished- so there are only so many ways to get into the best district in Texas. People will always be willing to pay for that- and as gas prices climb steadily past $3 again, it makes a 40-60 mile r/t commute from Plano/ Frisco/ Southlake more and more expensive.