Taxes and real estate

Question 1

A tax based on the assessed value of real estate or personal property

Answer 1

Ad Valormem Taxes

Question 2

Who establishes the requirements for property taxes?

Answer 2

Tax assessor

Question 3

Who determines who collects property taxes?

Answer 3

Tax commissioner/Collector

Question 4

The property market value is multiplied by an assessment rate based upon the property classification of the property to obtain the ______________? This is subject to exemptions.

Answer 4

Assessed Value

Example: ($100,000 * 0.20 = $20,000)

Question 5

The assessed value is multiplied by the millage rate to determine the appropriate yearly ________________?

Answer 5

Real Estate Taxes

Example: ($20,000 - $5,000 = $15,000 * 0.025 = $375)

Question 6

Allabama Classification of Properties: Class 1

Answer 6

Utility companies (30%)

Question 7

Allabama Classification of Properties: Class 2

Answer 7

Industrial & commercial property (20%)

Question 8

Allabama Classification of Properties: Class 3

Answer 8

Residential Homes and Historic Property, farm land, & timber land (10%)

Question 9

Allabama Classification of Properties: Class 1

Answer 9

Personal property (15%)

Question 10

How do you calculate the Millage rate?

Answer 10

County’s Budget /County’s Land Value

Question 11

Who can chage the millage rate?

Answer 11

County Comissioners

Question 12

Common Property Tax Exemptions

Answer 12

Homestead Exemptions
Senior Citizen
100% Disables
Blind

Question 13

Property Tax Appeals can be made to the Board of Equilization within ____ days of a notice of valuation change.

First appeal _________.
Second appeal ________.
Third appeal ________.

Answer 13

30 days

1. First apeaal: Review with Tax Assessor
2. Second appeal: Meeting with Board of Equilization
3. Third appeal: Legal proceeding with the state Circuit Court

Question 14

Income taxes for real estate

Answer 14

Taxed upon income from an investment. The key is yout current tax rate as what can be taxed upon.

1. Income paid as salary
2. After tax cash flow if we are a sole proprietorship
3. Dividend income paid from REITs

Question 15

When you sell a property for more than you paid for it, you have made what, for tax. This gain is taxable but is treated more favorable than for regular income tax purposes.

Answer 15

Capital Gain

Question 16

A permanent improvement that adds value to the property, such as a new roof on the building or new kitchens in the rental units.

Answer 16

Capital improvement

Question 17

The initial price you paid for the real estate, not just the cash you put in.

Answer 17

Basis

Question 18

That’s the type of capital gain result you get if you sell a stock after holding it for more than one year. These gains qualify for a special discount on taxes.

Answer 18

Long term capital gain

Question 19

That’s the type of capital gain you have if you sell a stock after owning it for one year or less. You want to avoid these gains if you can because you’re taxed at the ordinary income tax rate, which as I explain shortly, is one of the highest tax percentages.

Answer 19

Short-term capital gain

Question 20

A legal or natural person who is legally qualified and mentally capable to transact business.

Answer 20

Competent Parties

Question 21

Consideration for the interst in the property must be shown but can retain privacy regarding the exact amount paid

Answer 21

Good Consideration

1. Actual amount
2. “$1 and other good an valuable consideration”
3. “The sum of $10 and love and affection”

Question 22

A satisfactory description of the property that cannot possubly be misunderstood

Answer 22

Legal Description of a deed

Question 23

List the types of legal deeds

Answer 23

Lot and Block system
Metes and Bounds System
Governmental Survey System

Question 24

Organization exempt from paying property taxes

Answer 24

Charitable Organizations
Religious Organizations 
Public Schools, Colleges and College Housing
Public Lands
Veteran’s Organizations Property
YMCA and YWCA Buildings

Question 25

Personal Property Tax Exemptions

Answer 25

Items in the Home (not used for sale or business purposes)
Textiles
Peanuts and Pecans
Agricultural and Forest Tractors, Tools, Equipment and Property
Nuclear Fuel Assemblies

Question 26

Property Tax Appeals can be made to the Board of Equalization within ___ days of a notice of valuation change.

Answer 26

30 days

Question 27

Property Tax Appeals

First appeal: _____________________
Second appeal: _________________________
Third appeal: ___________________________

Answer 27

1. Review with Tax Assessor
2. Meeting with Board of Equalization
3. Legal proceeding with the state Circuit Court

Question 28

The key is your current ___ ___ as what can we be taxed upon.

(3) things we can be taxed on include:
1.

2.

3.

Answer 28

Tax Rate

1. Income paid as a salary
2. After tax cash flow if we are a sole proprietorship
3. Dividend income paid from REITs

Question 29

The difference between the purchase price of your real estate and the price you sell it for. _______ ______ tax is what you pay on that difference, after adjusting for a variety of exemptions, deductions and tax breaks.

Answer 29

Capital Gains Taxes

Question 30

If you are single, you can make up to $250,000 in profits on your home sale before you have to pay taxes.
If you are married, you can make up to $500,000 in profits before paying taxes. Only applies to primary residence and not to vacation home

Answer 30

Capital gain taxs breaks

Question 31

Under the current tax laws you would be taxed at a ___% capital gains tax rate on the amount over the $500,000 threshold.

Answer 31

20%

Question 32

Capital gains are currently taxed at __ %

Answer 32

15%

Question 33

If you hold the asset for more than one year before you dispose of it, your capital gain or loss is ____ _____.

Answer 33

Long-term capital gain

Question 34

f you hold it one year or less, your capital gain or loss is _____ ______.

Answer 34

Short-term capital gain