The Tax Doctor: Park Cities Land Values Down, Improvements Up

A Reader writes:

Tiffany, DCCD reduced land values and increased improvements in the Park Cities last year because the builders are out of the market here so land values actually did go down. They lowered land but increased improvements so there was little if any net effect. Most people did not pay attention to DCAD playing with the numbers because their value did not change or went down. When the residential market comes back, DCAD will increase the land values back and there will be a big overall increase.

The Tax Doctor Responds:

Yes, I agree with you Stan. Because most people only look at total value, they will not realize the change. Ultimately, this really hurts individuals who own “tear down” properties. All of the a sudden their poor condition home previously worth $30,000 is now worth $230,000.

But, you should know that the District didn’t voluntarily lower land values. This was a result of litigation from last year. Ever been in an ARB hearing and tried to argue land? If so, you will know that you were speaking to deaf ears. The ARBs rarely, if ever, decrease land values. I would go as far as saying never because I’ve never seen it happen. In order to lower land, you must litigate. I know personally that two homes in this area were litigated last year as I participated in both. We argued both on land and had the land reduced to $390k. The District HAD to respond or else they would be setting themselves up for easy equity arguments. So, this was they way they responded. Homeowners should be on the lookout. Their solution isn’t proper, especially for homeowners with tear down homes.