How are property values justified? (Dallas, Plano: wood floors, comparable sales, for sale)
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I moved to Dallas from Chicago a couple of years ago. I currently live in Dallas in a historic neighborhood and have been exhausted with all the non-stop work that goes into an old house here in Dallas. I love old homes but I don’t enjoy fixing and re-fixing things around my house. The main reason for all the upkeep of the house is the foundation issues in Texas which I was not aware of. Anyways, I am thinking of moving to a newer home 10yrs old and younger and it will need to be out in the suburbs since living in the city is expensive for a newer home. Also we have decided that we want to have minimum ½ an acre. There is something I still do not understand when it comes to property taxes. With all the foreclosures going on there are many homes which have become very affordable as far as the listing price. But say for example I buy a house that is “worth” to the central appraisal district $500,000. The house is foreclosed and is listed for $299,000, the home has been for sale for over 6 months. That tells me that the home is not really worth $500,000 if it cannot even sell for $299,000. If I were to become interested in purchasing the home I would get stuck with $10,000 worth of property taxes. How can I get the appraisal district to lower my taxes to at least the purchase price of the home. And how can I be guaranteed that one or two years later that home won’t be re-assessed and now “worth” $500,000. Does anyone have any pointers as to what can be done? I am interested in Plano, Frisco, Rowlett and Rockwall. At the end it’s not how much I buy the home for, it’s what I am told what the house is worth. I cannot imagine paying $299,000 for the home yet pay $10,000/year in property taxes. Any help is appreciated.[/SIZE][/font]
My experience with Denton County is that they will automatically adjust the appraised value to the purchase price if you go in and protest when the appraisals come out - the appraiser that I spoke with told me that their policy was to match the sales price since that is the best indicator of the true value.
You could check with the appraiser office in the counties where you are looking to verify that this is their policy also, and I would emphasize the $200k difference between appraisal and sale to verify the policy would still stand.
Be sure that you file your homestead exemption as soon as possible to prevent them from giving you a drastic increase the next year. With a homestead exemption, the county is limited to a 10% increase in assessed value each year, although they can still raise the appraised value beyond that ceiling.
Regardless, in the first year (or portion thereof), you will have to pay taxes on the current appraised value - they will not reduce that until the next appraisal cycle. If your lender is escrowing for you, this will make a big difference in your first-year payment.
I moved to Dallas from Chicago a couple of years ago. I currently live in Dallas in a historic neighborhood and have been exhausted with all the non-stop work that goes into an old house here in Dallas. I love old homes but I don’t enjoy fixing and re-fixing things around my house. The main reason for all the upkeep of the house is the foundation issues in Texas which I was not aware of. Anyways, I am thinking of moving to a newer home 10yrs old and younger and it will need to be out in the suburbs since living in the city is expensive for a newer home. Also we have decided that we want to have minimum ½ an acre. There is something I still do not understand when it comes to property taxes. With all the foreclosures going on there are many homes which have become very affordable as far as the listing price. But say for example I buy a house that is “worth” to the central appraisal district $500,000. The house is foreclosed and is listed for $299,000, the home has been for sale for over 6 months. That tells me that the home is not really worth $500,000 if it cannot even sell for $299,000. If I were to become interested in purchasing the home I would get stuck with $10,000 worth of property taxes. How can I get the appraisal district to lower my taxes to at least the purchase price of the home. And how can I be guaranteed that one or two years later that home won’t be re-assessed and now “worth” $500,000. Does anyone have any pointers as to what can be done? I am interested in Plano, Frisco, Rowlett and Rockwall. At the end it’s not how much I buy the home for, it’s what I am told what the house is worth. I cannot imagine paying $299,000 for the home yet pay $10,000/year in property taxes. Any help is appreciated.[/SIZE][/font]
You have to realize that property taxes in Texas are higher because there is no state income tax. In Illinois there is both an income tax and a property tax. You have to look at taxes in their totality.
Also, moving into a newer home does not mean you'll get a better home. Most of the newer construction in the places you are looking in is of poor quality. As a construction manager for one of the home builders once told me, "they are trailer homes on dirt".
You have to realize that property taxes in Texas are higher because there is no state income tax. In Illinois there is both an income tax and a property tax. You have to look at taxes in their totality.
We've talked about this before... in most areas, the state, counties and cities don't pool their tax revenues and pay all expenses out of a common pool.
So, the existence of a state income tax does not reduce a city's property taxes... the city will still have to collect property taxes to pay for cops, sewers, neighborhood street maintenance, etc.
In Texas, the property taxes seem high only because the cost of housing is so low in comparison. A typical family at the median California income will pay about the same number of property tax dollars as a Texas family at the median income. Of course in California, the cost of the house, and the mortgage, would be 2 to 3 times the cost in Texas.
This actually hurts California because the cost of city government is much higher, even if the total revenue per family is the same. So public services in California are much skimpier.
That's a good point about no pool of funds. I was thinking in total, regardless of source. I'm assuming who covers what (city, versus state, etc.) may differ by state, but I have no idea of the details.
Here is an interesting link. It shows state tax revenue by source. It is interesting to see the different sources amongst the states. As an example, California gets about 35% of its revenue from sales taxes, Texas gets 79% from sales taxes.
Here is another link showing total state and local taxes as a percent of per capita income. California averages 10.3% and Texas averages 9.3%.
Texas averages much lower state taxes per capita, but as a percent of income is relatively equal to California, and many other states, so the distribution of source differs, but the relative burden is close.
I moved to Dallas from Chicago a couple of years ago. I currently live in Dallas in a historic neighborhood and have been exhausted with all the non-stop work that goes into an old house here in Dallas. I love old homes but I don’t enjoy fixing and re-fixing things around my house. The main reason for all the upkeep of the house is the foundation issues in Texas which I was not aware of. Anyways, I am thinking of moving to a newer home 10yrs old and younger and it will need to be out in the suburbs since living in the city is expensive for a newer home. Also we have decided that we want to have minimum ½ an acre. There is something I still do not understand when it comes to property taxes. With all the foreclosures going on there are many homes which have become very affordable as far as the listing price. But say for example I buy a house that is “worth” to the central appraisal district $500,000. The house is foreclosed and is listed for $299,000, the home has been for sale for over 6 months. That tells me that the home is not really worth $500,000 if it cannot even sell for $299,000. If I were to become interested in purchasing the home I would get stuck with $10,000 worth of property taxes. How can I get the appraisal district to lower my taxes to at least the purchase price of the home. And how can I be guaranteed that one or two years later that home won’t be re-assessed and now “worth” $500,000. Does anyone have any pointers as to what can be done? I am interested in Plano, Frisco, Rowlett and Rockwall. At the end it’s not how much I buy the home for, it’s what I am told what the house is worth. I cannot imagine paying $299,000 for the home yet pay $10,000/year in property taxes. Any help is appreciated.[/SIZE][/font]
You cannot get a guarantee that the county assessor's office is not going to re-appraise the house at 500K. But you can fight it every time by filing a protest and show them the settlement statement of when you purchased it and a market analysis of the neighborhood. I prepare dozens of these yearly for customers for this purpose. The stats are that 99% of the time they will drop the value.
You are eligible for a homestead exemption if you have been in the house by January 1st. So for example, if you buy a house in March of '09 you will have to pay the full amount of taxes for the period of March through December '09. In January '10 you file for the exemption and at the end of the year of '10 you will take advantage of the exemption.
If the previous owner already had an exemption on the house, you will be able to benefit from it.
I also moved from Chicago years ago and I was not made aware of the foundation issues that can arise. It's a matter of maintenance and upkeep I found out over the years and movement can be minimized. I have seen many homes that are older (mid century or a bit after) that are in much better condition than some homes built in the 90s. Again, it's the upkeep. Keep that in mind when shopping for a new home.
You have to realize that property taxes in Texas are higher because there is no state income tax. In Illinois there is both an income tax and a property tax. You have to look at taxes in their totality.
Also, moving into a newer home does not mean you'll get a better home. Most of the newer construction in the places you are looking in is of poor quality. As a construction manager for one of the home builders once told me, "they are trailer homes on dirt".
So are you saying that buying a house for $299,000 and paying $10,000 in taxes is okay since Texas does not have a state income tax? I’m trying to figure out how to buy a less expensive home without having to pay an exaggerated amount of property taxes. I want to pay taxes on the property purchase price not what they tell me the house is worth. Again with all the foreclosures now, I can really take advantage of a less expensive home in a very nice area.
And if I look at taxes in their totality my state income tax in Illinois and property tax on my home did not come close to what property tax is here. The other thing is what is the point of showing off that there is no state income tax in Texas if you have to pay so much more in property tax.
But I’m not here to discuss why it’s more here, or that it was less there. I just want to know if I have any chance of buying a low priced home in a nice neighborhood and for more than just one year or 2 or 3 pay property tax on the purchase price.
You can only apply for the homestead exemption four months of the year--Jan-April--if you do it when you move in--say December of the previous year--they just throw away the request--
so pay attention to the rules...
You can only protest the assessment at certain times of the year as well because of when the tax notices are sent out--so sometimes a person might buy a house and have to pay a certain amount of the current year's taxes EVEN IF the house was sold as a foreclosure--
you can't protest taxes for a house you don't own so you have to buy the house and wait for the appropriate time to question the appraisal...
in our situation--we bought a house end of October--the sellers had not received their 08 tax bill--because of how Tarrant county sends notices by last-name-alpha...
the two months Nov and Dec that we own the house we are responsible for that portion--they gave us credit at sale for the 10 mo of tax they anticipated owning (they used the 07 tax appraisal which was the same as the past 2 or 3 years)
the title company said that was the standard practice...if the appraised value of the house has gone up--we basically pay the difference w/o recourse to getting it back from the sellers...
we are still living in our current home--waiting to do work on the new one--
our current home has our homeowner exemption--we can't have two
so we will pay more for the two months that we own the new house than the sellers did on monthly avg because they DID have the homeowner's exemption.
Once we move into the new one, we can drop the homeowner's exemp for old address and put new address in that category...
the fact that a house has been foreclosed and is marketed at a lower price does not automatically mean you will get a reduced tax...just depends on other homes in the area
a person who has a house in nice neighborhood and allows it to deteriorate has a hard time proving why his home is worth less than the neighbors'===
land/location has almost as much to do with house value as sq ft...
and same goes other way--if you add wood floors and new appliances and new windows--you have improved the value of your home--but your tax appraisal probably won't be increased even though you improved the value of the house
that is why appraised value usually goes by neighborhoods vs individual homes...
So are you saying that buying a house for $299,000 and paying $10,000 in taxes is okay since Texas does not have a state income tax? I’m trying to figure out how to buy a less expensive home without having to pay an exaggerated amount of property taxes. I want to pay taxes on the property purchase price not what they tell me the house is worth. Again with all the foreclosures now, I can really take advantage of a less expensive home in a very nice area.
And if I look at taxes in their totality my state income tax in Illinois and property tax on my home did not come close to what property tax is here. The other thing is what is the point of showing off that there is no state income tax in Texas if you have to pay so much more in property tax.
But I’m not here to discuss why it’s more here, or that it was less there. I just want to know if I have any chance of buying a low priced home in a nice neighborhood and for more than just one year or 2 or 3 pay property tax on the purchase price.
From a pure valuation perspective, I would say the price you pay for a distressed property, one in foreclosure, is not market value, it is a distressed value. You typically have a very motivated seller, who might be willing to take much less than "market value" just to get rid of it.
It is very possible that if you bought a $300,000 house in a neighborhood of $500,000 homes, you might be assessed at $500,000.
My understanding is that you have to prove the value of the home by looking at comparable sales in your area. If you are the only home at $300,000, and everything else is selling for $500,000, and there is nothing materially different about your house that would warrant a significantly lower value, then you don't have much of a case.
But if all of the houses in your area, of similar size and condition, are selling for $300,000, then you probably have a case.
I don’t know, it seems to me that there is great separation of class here in Texas. You can only live in a neighborhood that you can afford, not in a house that you can afford to buy. This is so hard for me to get used to, back in Chicago your same block can have homes worth on the market $250,000-$700,000. Your tax would be based on the value of your home not the entire neighborhood. This allows a more culturally diverse neighborhood and no one is looked at by what financial status they are, they are just a person. Here let’s say I find a nice home listed on the market at an affordable price in Lakewood across the street from a home worth $800,000, I can’t afford it. Unfortunately I am not wealthy so I cannot just choose any neighborhood, even if there are foreclosed homes at very good prices, pretty sad. So I don’t know what I’ll end up doing.[/SIZE][/font]
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