June 22, 2008
Casey on the appraisal problem

Rick Casey devotes a column to the HISD versus HCAD situation, and points to the obvious solution.

Texas is one of only five states that doesn't require that sales prices of real estate be reported to the state.

The government knows what you earn. It knows what you paid for your car and your clothes. But in Texas it doesn't know what you paid for your house or your business property.

Because the middle class lives mainly in neighborhoods where all the houses are similar, appraisal districts are able to do a good job at guessing at the values. Studies show the houses tend to sell for close to their appraised values.

But very expensive houses and commercial properties almost always sell for considerably more than the amount listed on the tax rolls.

The gap was illustrated earlier this week when Dallas officials told a state Senate hearing they want to change the law to require price disclosure on real estate sales.

Support for the change swelled in Dallas after the city found itself having to pay about $42 million for a piece of commercial property listed on the tax rolls as being worth $7.3 million.

The change won't happen, though. The people who are paying more than their share are afraid to tell the state how much they paid for fear their appraisal will go from, say, $220,000 to $240,000.

We've discussed this issue before - as we know, legislation to require sales price disclosure came up last session and will surely be introduced next year as well. The thing is, I don't see the objection Casey raises as being an intractable problem. Far from it, in fact: it should be a fairly straightforward matter to do some math, estimate how much revenue could be raised this way, and then point out that with a more accurate method of appraising high-end properties, the tax rate can be reduced, giving some real relief to the homeowners Casey frets about. This really shouldn't be that hard to get public support. Getting it past the lobbyists is another matter, but then it always is. The first step, though, should be very doable.

Posted by Charles Kuffner on June 22, 2008 to Budget ballyhoo

Levying property taxes without sales-price disclosure is charging a sales tax while you cover up the price tag at the checkout counter. Even Rick Perry understands this -- or at least he did when he endorsed the recommendation of the Pauken Commission a few years ago.

Posted by: David Siegel on June 22, 2008 6:08 PM

Does it really matter for the middle class? I mean, they find out what you paid for the home, so you get charged tax on that for one year. Then the appraisal goes through the roof like a runaway train. As my home gets older, the housing market goes in the toilet, and the value of my land goes down, my house continues to increase in value without any improvements being done. It is a ridiculous process to fight it since they rubber stamp the appraiser's work and deny any dispute regardless of what your evidence and opinion is. Don't even get me started on the used car value tax system in place now that burdens the middle and lower class even more.

The system is broken and is costing the middle class a ridiculous amount of money. The only real way to fix it is to go with a state income tax to pay for schools. Now how is that for stirring up a hornet's nest?

Posted by: WOScholar on June 22, 2008 9:04 PM

Why has it been easier to go after the little guy? If this method depends on a sale then businesses like Casey's employer, who stays put, will continue to operate under the radar.

Posted by: Charles Hixon on June 22, 2008 10:04 PM

Tax fairness and paying ones share of the tax burden aren't priorities of anti-tax, anti-government conservatives. Much easier to promise taxes will be lowered, knowing fully well that is all but impossible.

Posted by: Dennis on June 23, 2008 6:11 AM

It's not that difficult to approximate actual sale prices. Unless you're paying cash for a property, the lender is required to file with the county clerk documents that indicate the size and duration of its lien. The general contours of the size and length of your loan are public record.

Posted by: Leif on June 23, 2008 11:48 AM