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Chapter 7
Real Estate Taxation
| Question | Answer |
|---|---|
| True or False: There are federal taxes on real property | False the constitution of the U.S prohibits such taxes |
| True or False: The State government can levy taxes on property, but chooses to leave that power to the local gov. | True |
| why do local governments levy taxes on real property? | to raise funds for providing local services. (municipal) |
| what are tax districts and who establishes them? | County and local governments establish tax districts to collect funds for providing services. Ex: school district |
| What is a special tax district? | district that pays for the cost of a specific improvement or service that benefits an area. (TEMPORARY) Ex: fund extension of municipal water service. |
| what is an ad valorem tax basis? | taxes based on the assessed value of the property (paid annually) |
| what is a tax base? | the total of the appraised or assessed value of all real property within the areas boundaries, excluding partially or totally exempt properties. |
| how do you find tax base? | assessed value - exemptions= tax base |
| what is a tax rate/millage rate? | a rate that determines how much of a tax levy the tax base will receive. |
| how do you find tax rate? | dividing the taxing requirement by the tax base tax req/ tax base= tax rate/millage rate |
| what is a value assessment? | when assessors/appraisers, value the real property within their jurisdiction for purpose of levying taxes. (Valuation process results in an assessed value) |
| what are equalization factors? | factors that level out the unevenness of valuations |
| what is an appeal? | when property owners object to the assessed value of their property but not their tax rate. |
| what is a homestead exemption? | exemption of a portion of assessed value of principal residence from property taxation. |
| Apart from a homestead exemption. What are ways property owners can be exempt from property taxes. | - government-owned properties (immune real property tax) - properties owned by non-profit organizations (ex: church, exempt from real property taxation). - owner classes (senior citizen) |
| what is a tax district budget? | derivation of a tax rate/mileage rate, begins with the taxing body determining its funding requirements to provide services for the year. |
| True or False about a tax district budget: Part of the budgeted expenditures that cannot be funded from other income sources must come from real property. | True (budgetary shortfall becomes the ad valorem tax levy) |
| what is a mill? | A mill is one one-thousandth of a dollar ($.001). A tax rate of one mill means that the owner pays one dollar for every thousand dollars of assessed value. 2mills= 0.002 |
| what are tax rate limitation? | Some states, counties or other taxing districts place limitations or caps on the absolute millage rate or the annual increase in millage for property taxes |
| what is tax value? | the assessed value after all exemptions and adjustments have been taken into account. |
| how do you find each property owner's tax bill? | multiplying the tax rate for each taxing district times the taxable value of the property |
| what is a special assessment? | a tax levied against specific properties that will benefit from a public improvement. ex: sidewalks, water service and sewers |
| what is an involuntary tax lien? | If a taxing ENTITY initiates an assessment |
| what is a voluntary tax lien? | If PROPERTY OWNERS initiate the assessment by requesting the local government to provide the improvement |
| what is a tax certificate? | sold by some states, buyer of a tax certificate agrees to pay the taxes due. |
| what is a tax deed? | a legal instrument for conveying title when a property is sold for non-payment of taxes. The application for a tax deed causes the taxing agency to institute a tax sale or tax foreclosure. |
| what is a tax sale/tax foreclosure? | some type of auction. If the tax has not already been paid through the tax certificate process, the buyer of the property must pay the taxes due. |
| what is a redemption period in a tax sale? | the defaulted taxpayer has the right to buy back the property and reclaim title |
| what is equitable right of redemption? | If the taxpayer can redeem the property by paying the delinquent taxes and any other charges BEFORE the tax sale occurs |
| what is statutory right of redemption? | If the taxpayer can redeem the property AFTER the tax sale |
| True or False about tax sale: If the defaulted taxpayer does not redeem the property within the allotted time, the state issues the tax deed to convey title. | True |
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