The Little-People Tax

Dallas tax appraisers can't keep up with Ross Perot. But if you're Average Joe, they've got your number.

As for the other huge disparity in the accuracy of tax values--why Dallas seems so out of touch with the value of its most expensive homes--Mitchell and his staff have more elaborate explanations. At the top of the list is a state law that shields buyers from disclosing sales prices, a little-known privilege only the wealthy and their lawyers tend to utilize.

Mitchell says the secrecy provision, and a lack of information about renovations and custom-built homes, all but guarantee that the larger, more customized, more renovated, more distinct a house becomes, the more likely appraisers won't know what it's worth and will end up erring on the low side.

With more sales data to draw from and fewer custom features to complicate the picture, homes such as Wanda Taylor's are easier to track and appraise, appraisers say.

East Dallas homeowner Wanda Taylor, pictured with her husband, Robert, and dogs, is an easy mark for Dallas tax appraisers. They've raised the taxable value of her house each of the last four years.
Mark Graham
East Dallas homeowner Wanda Taylor, pictured with her husband, Robert, and dogs, is an easy mark for Dallas tax appraisers. They've raised the taxable value of her house each of the last four years.
East Dallas homeowner Wanda Taylor, pictured with her husband, Robert, and dogs, is an easy mark for Dallas tax appraisers. They've raised the taxable value of her house each of the last four years.
Mark Graham
East Dallas homeowner Wanda Taylor, pictured with her husband, Robert, and dogs, is an easy mark for Dallas tax appraisers. They've raised the taxable value of her house each of the last four years.

Plus, she doesn't have a posse of big downtown lawyers and accountants to challenge the district's facts and whittle down her taxes.

Reports of similar gaps in other growing cities suggest the problem is not Dallas' alone. An analysis of property records in America's five wealthiest counties, prepared for the Wall Street Journal in 1997, found the same pattern in those areas.

In Fairfax County, Virginia, homes costing more than $1 million sold for 71 percent more than their tax value, while smaller tract homes averaged just 8 percent higher, the newspaper's study found. The gap was even wider in Seattle, Washington, which was going full tilt that year in the technology boom.

One of the ritzy homes the paper singled out in its report was the mountaintop mansion of hotel heiress Leona Helmsley, a $25 million place in Paradise Valley, Arizona, vastly undervalued for property taxes by local appraisers. Helmsley, who was convicted of federal income-tax evasion in 1989, is perhaps best known for her remark, "Only little people pay taxes."

Taylor, who says she would like to add a half-bath to her house but is too pinched to pay for it, says she thinks Helmsley had it right. "I think the taxman gets what he can," she says. "We're easy to get."


Although the prices of their digs are sometimes overstated in the society columns, Dallas' rich and super-rich saw their home values soar well above their tax values during the last five years.

Take the most expensive home sale of 2000 for which the true sales price was made public through the tax appraisal process. As the sales brochure described the 4.7-acre estate on Park Lane, "Upon entering the gates, you will experience the feel of driving through the French countryside, with its perfectly manicured landscaping, picturesque creek with swans and rolling lawns..."

The five-bedroom, 12,448-square-foot French-style mansion, complete with pool, cabanas, tennis court, servants' quarters and stables, listed for $22 million, a Dallas record. Scott Ginsburg, who made his fortune in the radio business, bought it 18 days after it went on the market.

While society gossips had the closing price pegged at at least $20 million, Ginsburg, who later told a writer the 12-year-old place was being gutted and redone, actually picked it up for $10 million. Yet that was more than double the $4.3 million the house was appraised for on the tax rolls. So the previous owners, beauty-products barons Richard and Ginger Heath, got about a $123,000 tax break the last year they owned the house.

Foy Mitchell, the chief appraiser, says the Heath house was obviously undervalued by the county at the time it was sold.

So how did that happen?

"Before last year, we had nothing in our records that would have helped us support a value of $10 million on a 12,000-foot house, let alone $20 million," says Doug Gossom, the district's director of appraisal. "I can't just go in there and say it's worth $10 million. I have to have facts, comparable sales."

In 1999 and early 2000, Gossom says, the sheer number of high-dollar sales--fueled by the stock market and the tech/telecom/dotcom bubble--brought in more information. Prices spiked on the most exclusive Preston Hollow streets: Park Lane, Deloache Avenue, Strait Lane and the leafy lanes between.

Ginsburg's house helped fill in part of the picture.

During last year's round of appraisals, the district initially pegged the value of Ginsburg's spread at about $15 million. Like everyone else in the neighborhood, the new owner had kept the price to himself.

But Ginsburg took issue with the $15 million figure and last summer took his case to the district's appeals board. He made his point by showing his closing documents, which revealed the $10 million price, according to Mitchell and other district officials. Ginsburg declined to return calls seeking comment.

Gossom says that information was useful in valuing the 20,000-square-foot mansion Internet entrepreneur Mark Cuban bought in 1999 on Deloache Avenue. It's on the rolls this year for $11.4 million. "It's similar to the Ginsburg place, maybe a bit more quality," Gossom says.

Multiple land purchases by Excel Communications founder Kenny Troutt, who has assembled a stunning 30 acres along Inwood Road, and venture capitalist Tom Hicks, who has put together acreage for a big spread of his own, provided more details to support a big hike in land prices throughout Preston Hollow. Those began showing up on 2000 and 2001 tax appraisals, Gossom says.

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