Dallas-Fort Worth Real Estate Investor Club

TAD - sticky fingers

  • 15 Nov 2017 10:09 AM
    Message # 5587572
    Deleted user

    So, I bought a property on 8-12-17 from an elderly homeowner who had a "Homestead" exemption and "Over 65" exemption on the property. His taxes with these exemptions in place were obviously lower than what I would expect to pay as the new owner. So, my title company prorated his taxes based on his tax rate and confiscated the appropriate amount and delivered it to me at closing. A few months later I get a TAD tax bill for more than twice the amount of his 2017 tax bill that the title company based the withholdings on. I contacted TAD to find out why the 2017 tax bill had changed and they told me that they decided to remove both the exemptions for the entire year and bill the new owner "me" for the entire year with no exemptions. 

    Naturally, I expect to prevail on the issue of taxing the property at a rate unique to me for a period of time when I didn't own the property as well as having the valuation reduced to the amount that I paid for the property "new market value" for the portion of the tax year that I did own the property. 

    However, I just wanted to point out the sneaky slight of hand they tried to pull here. It is nothing more than a blatant attempt to steal in my opinion! 



    Last modified: 15 Nov 2017 10:19 AM | Deleted user
  • 15 Nov 2017 2:03 PM
    Reply # 5588025 on 5587572
    Deleted user

    I recently rehabbed and flipped a property in Tarrant that I bought from a guy that, like your seller, had the senior and homestead exemptions.  When I sold the property, the title company didn't recalculate and confiscate taxes but did have me sign a disclaimer acknowledging that TAD might recalculate the taxes without these exemptions and send me a bill.  

    I'm not sure if it's preferable to not have any additional taxes taken out when selling in hopes that TAD won't reassess, or to have the title company remove the estimated taxes at close.  If you want the former, Rattikin Title is who I used.

    Please let us know the results of your fight with TAD about paying taxes for time periods you didn't owe the property.  That's alarming, and I look forward to hearing that it ended well.  Thanks!

  • 16 Nov 2017 9:21 AM
    Reply # 5589145 on 5587572

    Here's the salient statute concerning prorating exemptions. It has been my experience that if the name of the new owner is an obvious entity such as a corporation, limited partnership, limited liability company, etc., TAD will prorate the taxes. I purchased a property a year ago that the previous owner only owned for about 16 months and didn't file for a homestead exemption during their ownership. The taxes at closing reflected an amount with the homestead exemption but shortly after my purchase that exemption was removed entirely for the period of the previous ownership. Needless to say I received a bill in Mat of 2017 for 2016 taxes even though I had already paid them.

    According to the statute below TAD can prorate the exemptions and must give the new owner credit for the exemptions during the period the previous ownership was in place.

    Sec. 26.10. PRORATING TAXES--LOSS OF EXEMPTION. (a) If the appraisal roll shows that a property is eligible for taxation for only part of a year because an exemption, other than a residence homestead exemption, applicable on January 1 of that year terminated during the year, the tax due against the property is calculated by multiplying the tax due for the entire year as determined as provided by Section 26.09 of this code by a fraction, the denominator of which is 365 and the numerator of which is the number of days the exemption is not applicable.

    (b) If the appraisal roll shows that a residence homestead exemption under Section 11.13(c) or (d), 11.132, or 11.133 applicable to a property on January 1 of a year terminated during the year and if the owner of the property qualifies a different property for one of those residence homestead exemptions during the same year, the tax due against the former residence homestead is calculated by:

    (1) subtracting:

    (A) the amount of the taxes that otherwise would be imposed on the former residence homestead for the entire year had the owner qualified for the residence homestead exemption for the entire year; from

    (B) the amount of the taxes that otherwise would be imposed on the former residence homestead for the entire year had the owner not qualified for the residence homestead exemption during the year;

    (2) multiplying the remainder determined under Subdivision (1) by a fraction, the denominator of which is 365 and the numerator of which is the number of days that elapsed after the date the exemption terminated; and

    (3) adding the product determined under Subdivision (2) and the amount described by Subdivision (1)(A).

    (c) If the appraisal roll shows that a residence homestead exemption under Section 11.131 applicable to a property on January 1 of a year terminated during the year, the tax due against the residence homestead is calculated by multiplying the amount of the taxes that otherwise would be imposed on the residence homestead for the entire year had the individual not qualified for the exemption under Section 11.131 during the year by a fraction, the denominator of which is 365 and the numerator of which is the number of days that elapsed after the date the exemption terminated.

    Acts 1979, 66th Leg., p. 2282, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1983, 68th Leg., p. 5002, ch. 896, Sec. 1, eff. Jan. 1, 1984; Acts 1997, 75th Leg., ch. 1039, Sec. 30, eff. Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1059, Sec. 5, eff. Jan. 1, 1998; Acts 1999, 76th Leg., ch. 62, Sec. 16.06, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 1061, Sec. 1, eff. Jan. 1, 2002; Acts 2003, 78th Leg., ch. 411, Sec. 5, eff. Jan. 1, 2004.

    Amended by:

    Acts 2011, 82nd Leg., R.S., Ch. 597 (S.B. 201), Sec. 2, eff. January 1, 2012.

    Acts 2013, 83rd Leg., R.S., Ch. 122 (H.B. 97), Sec. 5, eff. January 1, 2014.

    Acts 2013, 83rd Leg., R.S., Ch. 138 (S.B. 163), Sec. 5, eff. January 1, 2014.

    Acts 2015, 84th Leg., R.S., Ch. 1236 (S.B. 1296), Sec. 21.002(28), eff. September 1, 2015.


  • 16 Nov 2017 10:18 PM
    Reply # 5590388 on 5587572
    Deleted user

    Thank you Mr. Cox

  • 24 Dec 2017 8:32 AM
    Reply # 5647462 on 5587572
    Deleted user

    Well, I won the protest but only after going down their in person and being taken aside by one of the clerks.

    First they tried to claim that the previous owner had requested his exemptions removed and explained how they have a policy that doesn't prorate exemptions for a tax year. When I asked them to show me the communications from the previous owner to that effect. They of course could not produce them. So, then they shrugged their shoulders and said it must have been a glitch in the system. LOL. Of course it was!

    Anyway, exemptions were restored.

    Lesson learned:

    1. Any ownership change or exemption change event automatically triggers a re-appraisal of value.

    2. Always get a side agreement in writing between the previous owner and self to insure that any exemptions remain in place for the tax year. If they resist then require title to withhold at higher rate that reflects taxes without exemptions.

    Last modified: 24 Dec 2017 10:37 AM | Deleted user
  • 24 Jan 2018 11:07 AM
    Reply # 5700147 on 5587572
    Deleted user

    Everyone I have spoken with at TAD is blissfully unaware of these statutes, and told me that their long standing policy is that they do not prorate exemptions.  When I asked them if they were familiar with the statutes, I heard crickets on the other end of the line and they agreed to restore the exemptions and valuation for the entire year without an ARB hearing. So, basically they tried to zap me for an extra $2500 in taxes and when they realized I wasn't going to pay without a fight they rescinded their decision and ultimately charged me less than the statutes would have allowed because of their unwritten policy of "not prorating exemptions".

    Something stinks of corruption at TAD!

    I wonder how many millions of dollars they have milked from tax payers who didn't protest similar events? 

    I'm no lawyer but it just seams like solid ground for a class action law suit. 



    Last modified: 24 Jan 2018 11:10 AM | Deleted user
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