Taxes & Real Estate Flashcards
Tax based upon property value
Ad Valorem
Who establishes the requirement for property taxes?
Tax Assessor
Who determines who collects property taxes?
Tax Commisioner/ Collector
The property market value is multiplied by an assessment rate based upon the property classification of the property which equals?
The Assessed Value
The assessed value is multiplied by the millage rate to determine what? This is subject to exemptions.
Real Estate Taxes
Assessor rates differ by state: Alabama has 4
Class 1:
Class 2:
Class 3:
Class 4:
Class 1: Utility Companies 30% highest rate
Class 2: Industrial Property, Commercial Property 20%
Class 3: Residential Property, Historic Property, Farm Land, and Timberland 10%
Class 4: Personal Property such as automobiles 15%
Common Property Tax Exemptions in Alabama
- Homestead Exemption
- Senior Citizen
- 100% Disabled
- Blind
A tax rate that is applied to the assessed value of real estate.
Millage Rate
Who has the authority to change the millage rate?
Country Comissioner
5 mills =
5 x 1/1000 = .005
Other Property Tax Expemtions include:
- Conservation Use
- Disabled Veteran
- Widower of Veteran, Peace Officers and Firefighters
Exemption on primary residence (4,000)
Homestead exemption
Examples of Properties exempt from tax?
- Charitable Organizations
- Religious Organizations
- Public Schools, Colleges and College Housing
- Public Lands
- Veteran’s Organizations Property
- YMCA and YWCA Buildings
Examples of personal property tax exemptions?
- 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
Property Tax Appeals can be made to the Board of Equalization within ___ days of a notice of valuation change.
30 days
Property tax appeals
First appeal:
Second appeal:
Third appeal:
1st appeal: Review with Tax Assessor
2nd appeal: Meeting with Board of Equalization
3rd appeal: Legal proceeding with the state Circuit Court
This statement is used for calculating capital gains taxes.
Basis Statement
If you hold investment property for one year or less, your capital gain or loss is?
Short Term Capital Gain
If you hold the investment property for more than one year before you dispose of it, your capital gain or loss is?
Long Term Capital Gain
The key is your current ___ ___ as what can we be taxed upon.
Tax Rate
(3) things we can be taxed on include:
1.
2.
3.
- Income paid as a salary
- After tax cash flow if we are a sole proprietorship
- Dividend income paid from REITs
The difference between the purchase price of your real estate and the price you sell it for. It is what you pay on that difference, after adjusting for a variety of exemptions, deductions and tax breaks.
Capital Gains Tax
What are the tax deduction incentives for real estate investments?
- Personal Residence Exemption
- Deduction for Mortgage Interest
- Depreciation
Shields profits on the sale of a personal residence from capital gains taxes.
Personal Residence Exemption
