Texas Property Tax Protest 707

Question 1

Where would you find information on Equal and uniform taxation

Answer 1

The Texas Constitution

Question 2

Define market value.

Answer 2

1. The price at which a property would transfer for cash or its equivalent under prevailing market conditions if
2. Exposed for sale in the open market
3. For a reasonable time for the seller to find a purchaser
4. Both the seller and purchaser no all of the uses and purposes to which the property is adapted
5. Both the seller and purchaser seek to maximize their gains in neither is in a position to take advantage of the other

Question 3

What basic forces have the greatest effect in the marketplace?

Answer 3

1. Physical forces
2. Economic forces
3. Governmental forces
4. Social forces

Question 4

Define anticipation

Answer 4

Expectation of future benefits of ownership influences the amount buyers will pay for a property.

Question 5

What is the best way to appraise property that is intended for consumptive use (residential)

Answer 5

When the most probable use is residential the market (comp sales method) approach is always the best indicator of value this direct sales comparisons reflects how these use properties are typically required.

Question 6

What is the best way to appraise property that is intended for productive use (manufacturing)?

Answer 6

When the most probable use is to produce a product or products in the cost approach is the best indicator of value. The cost approach most directly relates to how these use properties are typically acquired.

Question 7

What is the best way to appraise a property that is intended for investment use (retail)?

Answer 7

When the most probable use is to produce an income return on the investment in real estate the income approach is always the best indicator of value. The income capitalization method directly relates the income produced and the value received.

Question 8

Define balance

Answer 8

Property tends to have more value if the surrounding area provides complementary property uses.

Question 9

Define special use valuation

Answer 9

Valuation of qualified agricultural use, open space land, recreational land, parking and scenic land, and public access airport property according to guidelines prepared by the Comptroller’s property tax division.

Note: the property tax code requires the appraisal district to use the income approach in appraising properties that qualify for special use valuation.

Question 10

Explain the duties of the chief appraiser

Answer 10

• Discover, lists, and appraised taxable property
• Determine exemptions and special appraisals
• Organize periodic re-appraisals
• Notify taxpayers, taxing units and the public about matters that affect property values

Question 11

What are some of the issues that a taxpayer may protest in an ARB hearing?

Answer 11

• Appraised value if taxpayer believes it is over appraised
• An equal appraisal of property in comparison to the median appraisal level of other properties in the district
• Inclusion of property on appraisal roles
• Denial of partial and whole exemptions
• Determination that property does not qualify for special use appraisal
• Determination that a change of use has occurred on previously qualified agricultural or timberland
• Identification of the taxing units in which the property is taxable
• Determination of ownership
• Failure of the ARB or chief appraiser to send required notices
• Any other appraisal district action that applies to a property owner and adversely affects the owner

Question 12

Define depreciation

Answer 12

• A property’s loss of value from all causes.
• The difference between replacement cost new and market value
• The sum of physical deterioration, economic obsolescence and functional obsolescence

Question 13

Define return rate

Answer 13

How much a property owner receives through the income stream after you subtract expenses and the cost of recapturing the wasting assets

Question 14

Define consistent use

Answer 14

Improved current use is consistent with the highest and best use of the site

Question 15

Define highest and best use

Answer 15

Highest and best use that use which will produce the highest return to the land over a given period of time is the best use

Question 16

What are the 4 criteria for highest and best use?

Answer 16

Highest and best use of a site:

1. Physically possible
2. Legally permissible
3. Financially feasible
4. Most productive

Question 17

But of the 7 major steps in the income approach to value?

Answer 17

1. Estimate the potential gross rent from market data
2. Estimated vacancy and collection loss and subtracted from gross rent
3. And miscellaneous income to arrive at an effective gross income
4. Analyze and estimate operating expenses
5. Subtract operating expenses from effective gross income to arrive at net operating income
6. Select an appropriate capitalization method technique and rate
7. Compute value by capitalizing the net operating income value = income/rate.

Question 18

Property Value - 345,000
Overall Cap Rate - .13%
What is the property’s income?

Answer 18

$44,850

Question 19

Property value-$635,000
net operating income-$182,500
what is the property’s overall rate?

Answer 19

28.74%

Question 20

Overall cap rate-9%
net operating income-$500,000
What is the property’s value?

Answer 20

$5,555,550 $0.06

Question 21

What are the 6 steps in the cost approach to value?

Answer 21

1. Estimate the land value as if vacant and available for development to its highest and best use
2. Estimate the total cost new of the improvements as of the appraisal date, including direct costs, indirect costs, and entrepreneurial profit from market analysis
3. Estimate the total amount of the cured depreciation attributable to physical deterioration, functional obsolescence, and external economic obsolescence
4. Subtract the total amount of accrued depreciation from the total cost new of the primary improvements to arrive at the depreciated cost of improvements
5. Estimate the total cost new of any accessory improvements and site improvements. Then estimate and deduct all accrued depreciation from the total cost new of the improvements
6. Add site value to the depreciated cost of the preliminary improvements, accessory improvements, and site improvements to arrive at a value indication by the cost approach

Question 22

What are the 5 steps in the sales comparison approach?

Answer 22

1. Data collection and verification
2. Analysis of market data to develop units of comparison and select attributes for adjustment
3. Development of reasonable adjustments
4. Application of adjustments to the comparable sales
5. Analysis of adjusted sales price to estimate value of subject property

Question 23

Define real property

Answer 23

Real property is the rates, benefits, and interest inherent in the ownership of real estate (the physical land that in everything permanently attached to it).

Question 24

Define personal property

Answer 24

1. Any property that is not real property

2. Property that is not permanently affixed to real estate and can be removed without causing damage to the real estate

Question 25

What are the 3 basic considerations for determining annexation?

Answer 25

1. The intent to permanently attach the property to real estate
2. The adaptability of the personal property to the use of that part of the realty
3. The relationship of the person by whom the annexation is made and that person’s interest in the land and the personal property
   Example: machinery permanently affixed to a building, and movement of which would cause significant damage to the building, may be considered real property

Question 26

Define tangible

Answer 26

1. Actual physical property
2. Property that can be seen, weighed, measured, felt or otherwise perceived by the senses, but does not include a document or physical perceptible object that constitute evidence of a valuable interest, claim, or write and has negligible or no intrinsic value.

Question 27

Define intangible

Answer 27

1. Personal property that is not tangible

2. Evidence of ownership of property rights and may be in the form of a document

Question 28

What are some examples of tangible personal property?

Answer 28

Furniture and fixtures, machinery and equipment, machinery and tools

Question 29

What are some examples of intangible property?

Answer 29

Deed of trust, mineral rights, etc.

Question 30

Give the 3 main powers and duties of the property tax administration.

Answer 30

Administration, enforcement, and collection

Question 31

Which of the following would be an example of economic force?

Answer 31

A manufacturing plant reopening after closing.

Question 32

Which of the following would be an example of social force?

Answer 32

An increase in divorce rate

Question 33

An area has a reputation for being a neighborhood with a low crime rate and an excellent quality of life. What social force is this an example of?

Answer 33

Social

Question 34

A city has a zoning code that does not allow satellite dishes in the front yard. This is an example of what kind of force?

Answer 34

Governmental

Question 35

San Francisco is a city influenced by its strategic location along the Pacific coast and its favorable climate. Which of the 4 forces are these part of?

Answer 35

Environmental