Dream of receiving new home turns into property-tax nightmare

A Boardman, Ohio, family was left with a tax bill the father called manageable.
STAFF/WIRE REPORTS
HACKENSACK, N.J. -- The Llanes family had a fairy-tale moment when "Extreme Makeover: Home Edition" swept into Bergenfield, N.J., last spring, knocked down their creaky old home and built them a dream house.
The community celebrated. People shed tears of joy.
Happily ever after, right?
Not quite.
A better home means a higher assessment. And a higher assessment, of course, means a higher tax bill. In this case, more than 14,000.
Now, Vic Llanes is beginning to feel the burden of his family's windfall.
"We feel an ax hanging over our head," said Llanes, who is blind and has three disabled children. "With all the taxes, it's like we're on a chopping block."
Some state lawmakers are trying to calm the family's fears through a proposed law that would permit short-term tax exemptions for homes that were renovated for disabled residents by charitable groups. Measures have been introduced in the Senate and Assembly, and the sponsors are hoping for approval early this year.
Under the proposals, homeowners' property taxes would remain at the level they were paying before the makeover. At least half the residents in the home must qualify for federal tax credit as a result of being disabled, and the improvements must be made as charity to accommodate the residents' disabilities.
Boardman family
Jeff Novak, whose Arlene Avenue home in Boardman, Ohio, was featured in an "Extreme Makeover" episode, says the tax bill is manageable.
"It's not where it's going to be a problem," said the father of three, a schoolteacher.
The taxes have increased, but Novak said that Burgan Real Estate is paying the taxes for the first five years. It was one of many gifts the family received through the show's visit.
In October 2005, the ABC show knocked down the family's home and build a larger, updated house in its place.
Novak's wife, Jackie, died in May 2005, leaving him to care for their three young daughters. Even when Novak takes over the payments, he says the amount isn't unmanageable.
The Mahoning County Auditor's office lists the annual taxes for the property at about 986 for 2005 when the house was valued at about 59,000.
However, the improvements bumped the value to more than 180,000, meaning the taxes due in 2007 will be at least 3,000, according to the auditor's office.
Five-year exemption proposed
The proposed exemption for the Llanes family is limited to five years, under the state constitution. But lawmakers could always revisit the issue when the time is up, said Rocco Mezza, Huttle's chief of staff.
Before the makeover, a small split-level with faulty plumbing and steep stairways was home to the family -- Vic; his wife, Maria, who has thyroid cancer now in remission; their 16-year-old deaf son, Zeb; their two nearly blind daughters, Guen, 20, and Carrie, 13; and Vic's blind mother, Isabel.
It was assessed at 222,200, and they were paying about 6,110 a year in taxes, according to Bergenfield Tax Assessor Art Carlson.
But the value of their property has more than doubled: Carlson estimates it's worth about 497,000, putting the Llaneses' tax bill in the new year somewhere around 14,550.
"If the [proposed law] doesn't pass, we will be in a far worse situation than we were in before," Vic Llanes said. "What choice do we have if we get driven away with the taxes? The last thing we want to do is to move."
The issue of how contestants cope with maintenance and tax bills after a home makeover has been raised several times since the show began airing in 2003. There have been reports of families facing similar problems coast to coast.
Criticism of producers
In 2004, Newsweek reported that the show's producers had found a loophole by "leasing" the contestant's home for 10 days, during which they renovated the property. IRS allows tax-free rental of less than 15 days, and the renovations are then considered "leaseholder improvement," which is tax-free. The production company was widely criticized, however, for putting contestants in a precarious situation with the IRS.
David Goldberg, president of Endemol, the show's production company, countered that contestants are made well aware of the potential tax increase and sign a contract before agreeing to the makeover.
"This show is about benevolence," he said. "It's about making people's dream of owning a home come true. It isn't about duping them and then leaving them riddled with a bunch of tax bills."