Assessment and Evaluation Flashcards

A home has a market value of $250,000, is assessed at 40% of market value, and the tax rate is 30 mills. What is its effective tax rate?

Answer: 1.2%

Tax = $100,000 × 0.030 = $3,000, and $3,000 ÷ $250,000 = 1.2%.

One mill of property tax equals:

Answer: $1 of tax per $1,000 of assessed value

A mill is one-thousandth of a dollar, so it equals $1 per $1,000 of assessed value.

What is the main purpose of state-level assessment equalization?

Answer: To adjust for different assessment levels across jurisdictions so taxes and state aid are distributed fairly

Equalization factors bring jurisdictions with different assessment levels to a common basis.

Which outlier trimming method does IAAO commonly recommend for ratio studies?

Answer: Excluding ratios beyond 1.5 times the interquartile range from the quartiles

IQR-based fences, usually 1.5 × IQR, are the standard way to identify extreme ratios.

Before running a ratio study, why might an assessor adjust sale prices for time?

Answer: To account for market price changes between the sale date and the assessment date

Time adjustments put sales on the same basis as the valuation date when the market is changing.

An improved property sells for $400,000, and the depreciated value of its improvements is estimated at $310,000. Using the abstraction (extraction) method, what is the indicated land value?

Answer: $90,000

Abstraction subtracts the depreciated improvement value from the sale price: $400,000 − $310,000 = $90,000.

What does the term 'ad valorem' mean for property taxation?

Answer: According to value

Ad valorem taxes are levied in proportion to the value of the property.