Property Tax Question (City of Dallas) (Highlands: sales, real estate, apartment)

[parkerh]

Hi, everyone. My wife and I are looking to buy our first home and I had a quick question about property taxes. Hypothetical House A is listed in Lake Highlands for $375,000, yet according to DCAD its appraised value in 2012 was only $235,000. The property tax burden between those two figures is pretty significant and we were wondering if the property tax in the first year AFTER we buy the house is based on the DCAD appraisal or the purchase price. The Internet seems to be full of conflicting information on this point, so I thought I'd ask you fine folks.

[TurtleCreek80]

Originally Posted by parkerh

Hi, everyone. My wife and I are looking to buy our first home and I had a quick question about property taxes. Hypothetical House A is listed in Lake Highlands for $375,000, yet according to DCAD its appraised value in 2012 was only $235,000. The property tax burden between those two figures is pretty significant and we were wondering if the property tax in the first year AFTER we buy the house is based on the DCAD appraisal or the purchase price. The Internet seems to be full of conflicting information on this point, so I thought I'd ask you fine folks.

I would budget for taxes based on purchase price. Those sneaky dcad people always end up knowing what you paid....

[ETex2]

Originally Posted by TurtleCreek80

I would budget for taxes based on purchase price. Those sneaky dcad people always end up knowing what you paid....

Yes, the DCAD does subscribe to MLS and the sales price will be published there despite the fact that Texas is a non-disclosure state.

[Squirl]

DCAD will expect payment of taxes at the existing appraised value as indicated on that property's DCAD account thru December 31st in the year of the sale and then will reset the market value for tax purposes at the sales price for the next taxing period.

[Considering Coming Back]

Originally Posted by ETex2

Yes, the DCAD does subscribe to MLS and the sales price will be published there despite the fact that Texas is a non-disclosure state.

For some reason they never seem to know the value of commercial or multi-family properties, though. One of the mysteries of the world.

[ETex2]

Originally Posted by Considering Coming Back

For some reason they never seem to know the value of commercial or multi-family properties, though. One of the mysteries of the world.

Not really a mystery at all. The appraisal districts typically use the Income Approach to value, and they are often inaccurate. Most multi-family and commercial property sales that can be used for comps don't get published in the MLS. In fact, I'd say that less than 10% of the sales prices for these properties are ever published at all. And to find those, you have to subscribe to an expensive service like Co-Star.

[Considering Coming Back]

Originally Posted by ETex2

Not really a mystery at all. The appraisal districts typically use the Income Approach to value, and they are often inaccurate. Most multi-family and commercial property sales that can be used for comps don't get published in the MLS. In fact, I'd say that less than 10% of the sales prices for these properties are ever published at all. And to find those, you have to subscribe to an expensive service like Co-Star.

The 20%-30% of value most multi-family and commercial property are appraised on is not an accident.

[ETex2]

Originally Posted by Considering Coming Back

The 20%-30% of value most multi-family and commercial property are appraised on is not an accident.

Are you suggesting that most MF and Comm. properties are appraised at 20-30% of their value?

[Considering Coming Back]

Originally Posted by ETex2

Are you suggesting that most MF and Comm. properties are appraised at 20-30% of their value?

I am. Look at list prices, which sure may be somewhat high, but are *significantly* higher than appraised prices after the sale. Look at the appraised value of a lower-income apartment unit compared to the rent that unit commands- or against the appraised value of a similar condo unit.

[ETex2]

They aren't necessarily accurate, but most are definitely not assessed at 20-30% of their value. Thank God for that, since getting assessed values lowered for commercial real estate is a part of what I do for a living.