Taxes & Real Estate

Question 1

Tax based upon property value

Answer 1

Ad Valorem

Question 2

Who establishes the requirement for property taxes?

Answer 2

Tax Assessor

Question 3

Who determines who collects property taxes?

Answer 3

Tax Commisioner/ Collector

Question 4

The property market value is multiplied by an assessment rate based upon the property classification of the property which equals?

Answer 4

The Assessed Value

Question 5

The assessed value is multiplied by the millage rate to determine what? This is subject to exemptions.

Answer 5

Real Estate Taxes

Question 6

Assessor rates differ by state: Alabama has 4

Class 1:
Class 2:
Class 3:
Class 4:

Answer 6

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%

Question 7

Common Property Tax Exemptions in Alabama

Answer 7

1. Homestead Exemption
2. Senior Citizen
3. 100% Disabled
4. Blind

Question 8

A tax rate that is applied to the assessed value of real estate.

Answer 8

Millage Rate

Question 9

Who has the authority to change the millage rate?

Answer 9

Country Comissioner

Question 10

5 mills =

Answer 10

5 x 1/1000 = .005

Question 11

Other Property Tax Expemtions include:

Answer 11

1. Conservation Use
2. Disabled Veteran
3. Widower of Veteran, Peace Officers and Firefighters

Question 12

Exemption on primary residence (4,000)

Answer 12

Homestead exemption

Question 13

Examples of Properties exempt from tax?

Answer 13

1. Charitable Organizations
2. Religious Organizations
3. Public Schools, Colleges and College Housing
4. Public Lands
5. Veteran’s Organizations Property
6. YMCA and YWCA Buildings

Question 14

Examples of personal property tax exemptions?

Answer 14

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

Question 15

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

Answer 15

30 days

Question 16

Property tax appeals

First appeal:

Second appeal:

Third appeal:

Answer 16

1st appeal: Review with Tax Assessor

2nd appeal: Meeting with Board of Equalization

3rd appeal: Legal proceeding with the state Circuit Court

Question 17

This statement is used for calculating capital gains taxes.

Answer 17

Basis Statement

Question 18

If you hold investment property for one year or less, your capital gain or loss is?

Answer 18

Short Term Capital Gain

Question 19

If you hold the investment property for more than one year before you dispose of it, your capital gain or loss is?

Answer 19

Long Term Capital Gain

Question 20

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

Answer 20

Tax Rate

Question 21

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

2.

3.

Answer 21

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

Question 22

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.

Answer 22

Capital Gains Tax

Question 23

What are the tax deduction incentives for real estate investments?

Answer 23

1. Personal Residence Exemption
2. Deduction for Mortgage Interest
3. Depreciation

Question 24

Shields profits on the sale of a personal residence from capital gains taxes.

Answer 24

Personal Residence Exemption