Haunted House

A priceless Fort Lauderdale property is sold on the cheap, and it's not the economy, stupid

"Everything that he loved," McCaleb contends, "she wants to destroy — including me."

As her case inches through Broward courts, McCaleb will have to scrape by on her other prizes from the Williamson estate: her former boyfriend's 2005 Bentley, plus a 110-foot yacht, which she reportedly sold for $7.5 million.

Regulatory agencies at the county, state, and federal levels may be less interested in McCaleb's plight than in the peculiar structure of this transaction. For instance, how did the buyer, Jerry O. Johnson, a real estate magnate from Wyoming, score a $6 million-plus piece of property for $3 million?

Splitting heirs: The Villa della Sirena is the site of a prize fight.
c. stiles
Splitting heirs: The Villa della Sirena is the site of a prize fight.

The county's conclusion: He didn't. "I reviewed this [sale] with one of our deed experts," says Chesler, coordinator for the county appraiser's office's real property division. "And we believe the deed was understamped, that it did sell for more than $3 million."

The term understamped refers to the documentary stamp tax, which is paid to the state by the seller at a rate of 0.7 percent of the sale price.

Understamping is the practice through which the seller and buyer agree to include home furnishings in the real estate deal, then embellish their value. Since those furnishings are recorded as "personal property," they are not subject to the documentary stamp tax, thereby allowing the seller to curb that expense. And from the buyer's standpoint, the furnishings are not recorded as part of the sale price listed for tax purposes. The practice lowers the sales price, thereby improving the buyer's position to challenge the valuation he receives the next year from the county. If he succeeds, he will pay less in annual property taxes.

In the Villa della Sirena deal, it's apparent that roughly $1.4 million was attributed to the furnishings, the value of which Mc­Caleb challenges in her suit. She cites a list she received from the estate trustees that placed the value of the home's furnishings at just $7,000.

Leonard, attorney for the estate, says that the furnishings were professionally assessed and that with an estate this size, the IRS will also take a careful look at what is claimed as personal property. The estate's claims are, he says, " defensible."

Andrew Mann, a Fort Lauderdale attorney who represented the buyer, denies that the property was understamped. Rather, his client, Johnson, "paid what he felt the property was worth." The 30-year-old home's value was diminished, Mann says, by the fact that it would need costly improvements, such as a new roof, which is currently under construction.

In addition, Mann points out that his client bought an adjacent property owned by Williamson for $2.75 million and that one must add these together — along with the $1 million-plus in personal property — to arrive at the real sale price, which is recorded as $7,150,250 in the Multiple Listing Service database used by real estate agents.

Even that figure, however, is significantly lower than the values assessed by the county, which places the worth of the two parcels at $7.5 million. What's more, the county's assessments are not meant to gauge true market value so much establish a minimum of its worth. Add the $1.4 million that was attributed to personal property and a conservatively assessed package of properties and furnishings worth nearly $9 million sold for just over $7 million.

Ultimately, it is up to the government to decide whether it's worth a closer look. Although he suspects an understamping or an "underreporting," Chesler concedes that his agency would not investigate the matter — that's up to the state Department of Revenue. But the state may not have the incentive. There's no guarantee the state will recover unpaid taxes, much less that those will be larger than the expense of conducting an investigation.

This quandary has bothered Pompano Beach Rep. Jack Seiler, who is considering drafting legislation to address it. "This happens a lot, from what we're hearing," he says. And there's no simple solution.

"I've been trying to get the Department of Revenue to find out whether we need to actually pass legislation or we need for them to enforce the legislation that's on the books."

But Seiler admits that, given the state's current dire financial straits, haggling over the documentary stamp tax amounts to being penny-wise and pound-foolish, another factor that would seem to favor real estate magnates with clever attorneys.

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2 comments
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Thank GOD,,VICKY DID NOT GET ANYTHING!! That's what you get when you cheat!!!

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Thank God Vicky did not get it!!

 
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