Friday, June 6, 2014
Highest-priced homes taxed far less | Last Word
Mikal Watts has been in the news a fair amount lately.
Lawsuits accuse the highly successful and highly controversial lawyer of listing thousands of phantom clients in the fishing industry for claims against BP in its massive 2010 oil spill in the Gulf.
Now Watts is in the newspaper for putting his Dominion home up for sale.
What caught my eye was not the $12 million price tag Watts put on his home.
It may well be worth it.
The 27,000 square-foot house has five bedrooms, six and a half baths and a separate guest house with one bedroom and two baths.
And there’s the “state of the art gymnasium and workout facility used by various NBA players.”
And by President Obama for a 2010 fundraiser. (Watts was a megadonor to Democrats before his recent troubles.)
But what caught my attention was the value that the Bexar County Tax Appraisal District had put on the house: a measly $2.97 million dollars – or one quarter of Watts’ listing price.
There has been considerable publicity lately about the issue of businesses using state law and the courts to get their properties appraised at much lower than market value for tax purposes.
But are rich homeowners also able to significantly underpay their portion of the tax burden?
I decided to do a quick and dirty study to see.
It was simple:
I compared the listed sales prices of 10 of the most expensive homes on the San Antonio market right now with the tax appraisals of those homes.
Then I looked at the tax appraisals for 10 $200,000 homes.
Watts has the best deal of the expensive homes on the market. But the others aren’t doing badly.
Another Dominion home at 11 Whitechurch Lane is on the market for $3 million. But it’s on the tax rolls at $992,000.
That’s one-third the listing price.
The home at 14 Crescent Park in the Dominion is yours for $6.5 million, but is taxed at less than half that at $3,104,000.
It almost made me feel sorry for the Dominion owners at 47 Vineyard whose tax burden is calculated at 94 percent of their asking price.
Overall, the 10 mansions I looked at, including ones in Terrell Hills and Shavano Park, were appraised for tax purposes at an average of 58 percent of their listing price.
Now, you might say that sellers don’t always get what they ask for.
When it comes to expensive houses, you’d be pretty much wrong.
According to the San Antonio Board of Realtors, all of the six homes sold in April for more than a million dollars went for very close to the asking price.
One went for more.
The typical house went for 95 percent of its listing.
But if rich folks on average pay about 58 percent of their fair burden, how much do middle class folks pay?
On average, according to my quick-and-dirty survey, $200,000 homes are taxed at about 92 percent of their asking price –- almost double the share of the rich.
Michael Amezquita, who heads the Bexar County Appraisal District, gave three reasons for the discrepancy.
One is that it is easy to determine the value of $200,000 houses. Most are in subdivisions with very similar houses with recent sales.
Meanwhile, genuine mansions are one of a kind.
And while the appraisal district is able to learn the sales price when they are reported to the Board of Realtors, rich homebuyers are able to avoid that.
They simply pay the real estate agent the roughly $5,000 fine realtors are charged when they don’t report sales prices.
Finally, with much more at stake, wealthy owners can hire high-priced attorneys to take on the appraisal district in court.
Amezquita says commercial valuations are even more unfair, but he says it’s all legal because the Legislature makes it so - most importantly by not joining many other states in requiring public reporting of sales prices.
It may be legal, Amezquita says, but, and I quote, “I’ve never seen anything as corrupt as what I’ve seen now.”