Taxes and Assessments Flashcards
Assessed Value
A valuation placed upon property by a public officer or a board, as a basis for taxation. (by an assessor)
(NOT the same thing as Market Value)
Assessments
A charge against real estate made by a unit of government to cover a proportionate cost of an improvement such as a street or sewer.
(under the law, the assessed value as the legal assumption of validity)
Has to have a bearing toward Market Value
It’s illegal to assess a property based on the new purchase price! - Welcome Neighbor Policy
The assessment is made on the actual condition of the property NOT the highest and best use of potential value!
Purpose of Taxation
Real estate taxes are part of the municipal budget used to pay for Municipal Services such as:
- Police Department
- Fire Department
- Libraries
How Tax Rate is Determined
Municipality: 100,000 parcels (for example)
Municipal Budget Required: $10,000,000 (example)
Tax Rate: 100,000/$10,000,000 = 1%
Calculation of Real Estate Taxes
Equalization Rate Formula:
Equalization Rate = Total assessed value of municipality / Total market value of municipality
Example:
equalization rate: 1%
assessment: $1,000
assessed value : $1,000 / 1% = $100,000
Determine if your Real Estate is Over Assessed
market value ascertained by real estate appraiser x state equalization rate = appraised assessment
Actual assessment (as it appears on records) - appraised assessment (this is what assessment should be) = How much the assessment should be lowered
Assessing Unit
A city, county, town or village with the authority to value real property for purposes of taxation.
Special Assessment
An assessment made against a property to pay for a public improvement by which the assessed property is supposed to be especially benefited.
Assessment Ratio
aka the Equalization Rate
Why Do Assessments Differ?
- The assessments may be done by different people
- The equ. rate may have been set by different people
- Old construction v. new construction
- Assessor can’t get inside property to do a thorough assessment
It’s an APPROXIMATION
Approved Assessing Unit
A city or town which has been certified by the State Board of Real Property Tax Services to have completed a revaluation or an update in conformance with its rules and regulations.
Equalization
relationship between the Market Value & Assessed Value
Equalization Rate Formula:
Equalization Rate = Total assessed value of municipality / Total market value of municipality
Equalization rate is used to make market and assessed value equal. A conversion factor used to convert market value into assessed value
Market Value = assessment / equalization rate
Special Assessment Districts
A geographic area in which the market value of real estate is enhanced due to the influence of a public improvement and in which as tax is apportioned to recover the costs of the public improvement.
Assessment Review Board
An independent tribunal established to hear assessment appeals. Came about because of tax protests. Intermediate step to resolve court cases
Protesting Tax Assessments
-Grievance period where taxpayers can protest the assessed value on their real property (must be). If you don’t you wave your right forever!
It is required by law that people who protest taxes for other people must be licensed!!
Why Protest Taxes?
- Assessed value is too high
- Property is unequally assessed
Two types of real estate tax protests: residential and commercial
- You can protest the value of the property
- One can protest the taxes based on factual errors: building sq footage error, land sq footage error etc
-If the assessment is protested, the assessor has to prove it
