Complex Systems with Patrick McKenzie (patio11)

How we tax property, with Lars Doucet

Dec 12, 2024

Lars Doucet, author of "Land is a Big Deal" and a property tax expert, joins the conversation to unravel the complexities of property assessment. He explains how cities value properties and the political dynamics behind tax rates. The discussion covers the challenges of maintaining equity in assessments, especially with discrepancies between neighbors. Doucet shares insights on how technological tools like GIS are reshaping the landscape of property valuation and the potential benefits of predictive analytics in creating fair tax policies.

01:10:22

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Episode guests

Lars Doucet

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

The separation of property assessment and tax collection allows appraisal districts to absorb public frustration about tax increases due to market conditions.

Market value, though crucial for assessments, can be complicated to define due to various influencing factors, often leading to discrepancies homeowners resent.

Property tax protests empower homeowners to challenge assessments, though the rise of agents for this process can dilute direct negotiation benefits.

Deep dives

Understanding Property Tax Assessments

Property tax assessments can be confusing, especially as they vary significantly by state and local regulations. In Texas, for instance, a central appraisal district determines property values, which are then used by various taxing entities to calculate taxes owed. This system is designed to separate the power of assessing property value from the entities that levy taxes, thereby placing the appraisal district in a position to absorb public frustration about tax increases. Elected officials often utilize this separation strategically to deflect criticism, presenting increases in assessed values as the cause of higher taxes, even though fluctuations are based on market conditions.

Intro

3min

Challenging Property Tax Assessments

16min

Understanding Property Assessment and Renovations

4min

Hedge Funds and Real Estate Insights

15min

Navigating Property Taxes: Complexities and Innovations

23min

Valuation and Taxation of Land

7min

The Evolution and Importance of GIS in Property Management

3min

In this episode, Patrick McKenzie (patio11) and Lars Doucet, the author of Land is a Big Deal, discuss how cities determine your property's value and collect taxes. They explore how assessment offices juggle political pressures, statistical models, and technological tools while trying to maintain equity across millions of properties. They also cover why assessment offices are separate from tax collectors, how property value protests actually work, and why your neighbor's house might be assessed differently than yours.

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Full transcript available here: www.complexsystemspodcast.com/property-assessment-lars-doucet/

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Sponsors: GiveWell | Check

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org (and type in "Complex Systems" at checkout).

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

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Links:

Lars’ book: https://www.landisabigdeal.com/

Lars’ blog: https://www.fortressofdoors.com/

Bits about Money: https://www.bitsaboutmoney.com/

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Twitter

@larsiusprime

@patio11

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Timestamps
(00:00) Introduction
(00:23) How property taxes work (Texas Example)
(02:45) The political art of avoiding tax rate blame
(05:53) Sources of real estate data
(08:08) Historical property assessment
(11:04) Statutory guidance vs. Actual practice on market value assessment
(14:25) Tax rate strategy and sandbagging
(15:17) Assessed value vs market value
(16:16) Assessment caps and Prop 13
(18:22) Sponsor: GiveWell | Check
(20:27) Data collection in the field
(22:54) Data collection methods
(25:08) Property valuation: Beyond location and correlative factors
(26:52) Depreciation of buildings
(27:37) Orthodox view of depreciation
(30:53) Real estate cultural differences
(33:59) Urban redevelopment and land value
(36:59) Small business realities and perceptions
(46:19) Property tax protests
(50:45) Predictive protests
(52:19) Accuracy vs equity testing
(58:50) Cook county assessor's office
(1:01:11) Lars's background
(1:05:38) What is GIS?
(1:09:52) Wrap

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