Texas property tax enforcement ripe for class action lawsuit (San Antonio: sales, apartment)

[Restrain]

Back in the late 1970's, the method of assessment was challenged in court, and found unconstitutional in that there were various agencies, with uneven levels of taxation. Same property could have wide variances of levels of valuation between jurisdictions. This led to the creation of the tax appraisal districts and a mandate where all property types will be assessed between 90-110% of value.

Well, currently, homeowners with houses in price under $1M are pretty much assessed at value. This is due to the appraisal districts having access to MLS, and are able to work the values. However, homes over $1M are routinely not listed in MLS and the sale prices are not disclosed. Same with land and commercial buildings.

Recent studies have shown that apartment buildings and commercial land is assessed in the area of 50% of market value and commercial buildings in the area of 35% of market value.

The agents for these properties have been fighting change, and the legislature is not going to take any action even though the issue has been brought up. So it will take another lawsuit filed in Travis County to force change.

Maybe an attorney that follows City-Data might be willing to take it up.

[Trainwreck20]

This is due to the appraisal districts having access to MLS

Generally, no.

[L210]

KSAT in San Antonio did a story on something like this.
Homeowners said to be bearing biggest property tax load | Defenders - Home

[verybadgnome]

Like our criminal court system those with the time and funds can work within the system to get results that normal folks would never get. At least 90%? Wow, there are properties around here that get appraised at 30% or 40% of their market value.

I've also seen an article where some very high end residential sellers will pay the agent $5,000 to cover the penalty for not reporting the sales figure to MLS. $5,000 to save possibly save 10 times that. Why wouldn't they if that is how the game is set up.

And appraisals are only half the battle. We have all kinds of exemptions that almost never get scrutiny. I have yet to see a cost-benefit study of historical home or agricultural exemptions, just a lot of emotion-laden arguments from those who would benefit the most.

If Texas thinks its property tax system should be a role model for other states that instead use state income taxes, I would say for most of the population it is not.

[lonestar2007]

Originally Posted by Trainwreck20

Generally, no.

I was at my appraisal district's office in May and they handed me a sheet listing recent MLS sales and prices in my area.

[Trainwreck20]

They can only provide those that were provided to them via other homeowners' protesting, generally speaking. Although that can actually be quite a few, it is not direct access to the MLS.

[winkosmosis]

Originally Posted by verybadgnome

Like our criminal court system those with the time and funds can work within the system to get results that normal folks would never get. At least 90%? Wow, there are properties around here that get appraised at 30% or 40% of their market value.

I've also seen an article where some very high end residential sellers will pay the agent $5,000 to cover the penalty for not reporting the sales figure to MLS. $5,000 to save possibly save 10 times that. Why wouldn't they if that is how the game is set up.

And appraisals are only half the battle. We have all kinds of exemptions that almost never get scrutiny. I have yet to see a cost-benefit study of historical home or agricultural exemptions, just a lot of emotion-laden arguments from those who would benefit the most.

If Texas thinks its property tax system should be a role model for other states that instead use state income taxes, I would say for most of the population it is not.

Wow, as if property tax wasn't regressive enough to begin with

[Trainwreck20]

I am a bit conflicted about the whole 'regressive' tax argument. For one thing, you can almost always argue any tax is regressive if you try hard enough. But aside from that, assume that there are two households:
Each is a couple with two children. Each commutes the same distance to work. Both are basically the same load on the system - school, roads, emergency services (fire, EMS, etc). However, one lives in a $400k house, the other in a $200k house. The one with the more expensive house pays essentially twice as much for the same services.

For arguments sake, lets assume the family in the more expensive house earns twice as much as the family in the less expensive house. Now, assume that the family in the more expensive house downgrades to a $200k house. The cheaper house value lowers the taxes and allows them to bank the extra money (taxes and house payment). Is that unfair?

Of course, if it was income tax instead of property tax, it is the same thing - the family with twice the income is paying twice as much for the same services still.

At the extreme, obviously, the poverty level cannot pay for the services required to support them. But why should the 'wealthier' middle class support the 'less wealthy' middle class?

Finally, the discussion is basically about 'hiding' the value of your property, but TCAD can always appraise it at whatever they want and make you prove them wrong. And if we had in income tax (even though property tax is NOT going to just disappear), do you not think that a huge amount of that is 'hidden' by the wealthy? And a million little loopholes, built in by your favorite legislator. Property tax is, at the very core, fairly straight-forward, since it is sitting there on the lawn, so to speak.

[verybadgnome]

Originally Posted by Trainwreck20

I am a bit conflicted about the whole 'regressive' tax argument. For one thing, you can almost always argue any tax is regressive if you try hard enough. But aside from that, assume that there are two households:
Each is a couple with two children. Each commutes the same distance to work. Both are basically the same load on the system - school, roads, emergency services (fire, EMS, etc). However, one lives in a $400k house, the other in a $200k house. The one with the more expensive house pays essentially twice as much for the same services.

For arguments sake, lets assume the family in the more expensive house earns twice as much as the family in the less expensive house. Now, assume that the family in the more expensive house downgrades to a $200k house. The cheaper house value lowers the taxes and allows them to bank the extra money (taxes and house payment). Is that unfair?

Of course, if it was income tax instead of property tax, it is the same thing - the family with twice the income is paying twice as much for the same services still.

At the extreme, obviously, the poverty level cannot pay for the services required to support them. But why should the 'wealthier' middle class support the 'less wealthy' middle class?

Finally, the discussion is basically about 'hiding' the value of your property, but TCAD can always appraise it at whatever they want and make you prove them wrong. And if we had in income tax (even though property tax is NOT going to just disappear), do you not think that a huge amount of that is 'hidden' by the wealthy? And a million little loopholes, built in by your favorite legislator. Property tax is, at the very core, fairly straight-forward, since it is sitting there on the lawn, so to speak.

I guess you can make similar arguments for other taxes. If you want to pay less sales tax buy less stuff; less gas tax then drive less; and less income tax take a lower paying job. Of course all of those are not reasonable choices to most, but that is beside the point. If our leaders wanted to have a flat tax as you are alluding to, they would have make it say, $5k/year/house, to be adjusted every year, but they did not do that. And it is flatter than an income tax which usually goes up in percentage with higher brackets.

And if you want to talk about donors and donees we have those at other levels, like states. In this case we could cut funding to the likes of Alaska and Mississippi because they provide less in revenue than they command in outlays.

Anyway if the goal is to get it within the 90-110% bracket, agencies like Travis CAD are failing miserably. TCAD can appraise it at whatever they like but who has the most political clout and weapons to fight bad appraisals? Those are the groups that win at this game.

[TX75007]

Originally Posted by winkosmosis

Wow, as if property tax wasn't regressive enough to begin with

I have to disagree with this. Property tax by its nature is the opposite. And consider the following with respect to Texas.

1. If the multi-family dwellings carry a smaller tax load, then the tenants pay a smaller share of tax.

2. The richer ISDs send nearly half their taxes to the poorer ISDs.