CHAP 02 REVIEW Q&A

Question 1

The owner / occupiers of three residences located in three different taxation jurisdictions all have the same market value:
Land Value = $240,000
Improvement value = $170,000
Total market value =$410,000

Given the following information, calculate the effective tax rate (for actual taxes) appropriate for each residence.
For jurisdiction A and B, assume that the value for the Total Assessment is the value subject to tax and not the total appraised value of all the properties.
For jurisdiction C, note that the figure given for the total taxes is net of the $150 owners/occupier grant.
A total of 110 properties in this jurisdiction were allowed this tax relief.

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Answer 1

Answer :

Question 2

Provide two examples of how legislation could prohibit an assessor from maintaining the valuation principles of the ad valorem system.

Answer 2

Examples of how legislation could prohibit an assessor from assigning a market value:

• use value assessment : assess on the basis of current use rather than highest and best use; e.g : farmland.
• required to use cost manual; may not reflect current market value.
• assessment restrictions are in place; e.g: assessment averaging, proposition 13, limits on assessment increases, etc.

Question 3

For non-assessment real estate professionals, such as fee appraisers and real estate brokers, what assessment issues must be taken into consideration during the performance of their jobs?

Answer 3

A few assessment related issues that may be of interest to non-assessment real estate professionals are :

• tax rates
• assessment basis… highest and best use, or value in use
• approaches to value commonly used (i.e. is it solely cost based assessments)