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.

Says Mitchell, in Dallas: "I'm not gonna name any names, but I have two members from the Legislature who are protesting their values right now, and I can't get closing statements from them. We're having to try to follow up with subpoenas [which can be sought by the appraisal board]. Now that's not the way it should work, but that's the way it works."


While secret prices help the wealthy confound the taxman, the middle and upper-middle swath of homeowners has at least one trick in the bag: home renovation.

Swiss Avenue mansions have been hot properties for years, but the Dallas Central Appraisal District hasn't caught on. This one is currently on the rolls for $287,800. The fixer-upper next door sold last year for $620,000. Below: 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.
Swiss Avenue mansions have been hot properties for years, but the Dallas Central Appraisal District hasn't caught on. This one is currently on the rolls for $287,800. The fixer-upper next door sold last year for $620,000. Below: 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.
Swiss Avenue mansions have been hot properties for years, but the Dallas Central Appraisal District hasn't caught on. This one is currently on the rolls for $287,800. The fixer-upper next door sold last year for $620,000.
Mark Graham
Swiss Avenue mansions have been hot properties for years, but the Dallas Central Appraisal District hasn't caught on. This one is currently on the rolls for $287,800. The fixer-upper next door sold last year for $620,000.

Because tax appraisers make their evaluations from the street, they have little idea whether a house is plain vanilla inside or stuffed with brand-new $3,000 commercial-grade stoves, slab granite countertops, marble bathrooms, media rooms, halogen lights and other pricey features that can greatly increase a house's value.

In theory, the homeowner or the contractor is required to state the size and approximate value of those renovations when they take out building permits. In practice, appraisers say, these self-declarations and reality often don't match.

"In the M Streets we'd see people take out permits for a bathroom renovation, and they'd remodel the whole house," Gossom says.

The district, which tacks these self-declared dollar figures onto taxable valuations, is aware of the widespread under-reporting and tries to get a handle on the extent of the work. But a look at one of the city's most-renovated streets, Swiss Avenue, shows vast differences between what the district knows and what is actually going on.

Take 4946 Swiss Avenue, a stern-looking but highly renovated 1913 Prairie-style home that is being advertised for sale at a street-record $1.5 million. The sales flier for the "former Bishop Lynch home on famed Swiss Avenue" touts side-by-side duel-fuel Thermador ranges, two dishwashers, a refrigerator "system," kitchen island, media room and 7,000 square feet of living space.

"This square-footage figure is a problem right off the bat," says Gossom, when asked why the appraisal district thinks the house is worth only $688,200, less than half the asking price. While square-footage records are never exact, the house is listed on tax records as being 1,500 square feet smaller than what is pitched on the sales brochure. The district says the last building permit it's aware of was taken out in 1998, when a declared $100,000 renovation job was started.

The house's owner, Hassan Parsa, said on a recent evening that he was too busy to comment because he was dealing with workmen inside. The next day, he declined comment altogether.

The district's records also don't jibe with the sales brochure at 5647 Swiss, which is advertised as a newly renovated three-story Prairie-style home with a new 14-by-16-foot home theater recently built on the third floor. The tax district sketches available on the Internet don't even show the existence of a third floor.

On the tax rolls, the 4,632-square-foot house is worth $493,000. In the sales brochure, it's 5,135 square feet, and yours for $895,000. Three other similarly sized homes on the street are for sale in the upper $800,000s, and one is currently under contract.

While Gossom at first scoffed at the suggestion that a home on Swiss could bring a price in the $1 million range, he changed his view after talking with his staff. "They say $1 million on Swiss is very possible," he says. "We'll have to give that area some attention next year."

As in Preston Hollow and the Park Cities, the prices of some of the largest sales on Swiss over the past year are not known to the taxing district.

Of the known sales between mid-1999 and early this year, the average home sold for $610,000, records reviewed by the Dallas Observer show. The average appraised tax value at the time of sale was $384,000, about 63 percent of market value.

Larry Johnson, a Swiss Avenue homeowner who has made his living in real estate, says a lot of residents on the street have finished out their third-story attics, "and probably they should count it" as square footage. But Johnson has his own ideas about why home tax appraisals seem to be so off-base. "The appraisers aren't very good," he says. It takes considerable knowledge and effort to value houses on a street such as Swiss, and he says he has seen little of either in his dealings with appraisers over the years.

Gossom and Mitchell take issue with that but concede that mass appraisals will never be as precise as fee appraisals done for lenders. "I have 640,000 properties to appraise, and we do half that file every year," Gossom says.

Mitchell says the law requires that all properties be re-appraised every three years, including those in areas such as southeast Dallas County that tend to change little from year to year. "When an area falls behind...we concentrate there," he says.

Talking in his spacious, unrenovated living room, Swiss resident Johnson doesn't seem to be afraid that he's waving a red flag in front of a bull by knocking the district. His house, a stately brick Greek Revival-style home on one of the boulevard's grandest blocks, is appraised at $287,000. "I tried to sell it last year for $500,000. People hurt my feelings and didn't take it," he says, pointing to a sagging spot in the ceiling and a patch of dry rot on the front-porch pillar. "It looks better from the street."

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