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Chapter 15 Taxes and Assessments.

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Chapter 15 Taxes and Assessments. Review Gov’t Limitation of Private Ownership of Real Estate. Taxation (Ad valorem and Income) Escheat Eminent domain Police power. I. Ad Valorem Taxes. Administering Property Taxes First step, identify all properties and estimate their values
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Section 15 Taxes and Assessments

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Review Gov't Limitation of Private Ownership of Real Estate Taxation (Ad valorem and Income) Escheat Eminent space Police power

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I. Promotion Valorem Taxes Administering Property Taxes First step, recognize all properties and appraisal their qualities Second step, build up a financial plan and expense rate. The financial backing is dictated by the suitable government authorities in view of the expenses of giving taxpayer driven organizations to the group (police and fire insurance, schools, libraries, road, and so forth.) Dividing the spending sum by the assessment digest (complete estimation of properties in the purview) yields the duty rate important to create the spending sum. Third step, charge the property proprietors and gather the assessments.

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Key Terms/Calculations "Promotion valorem" charge Millage rate Assessment proportion Exemptions The duty bill for a property with a business sector estimation of $120,000 in a locale that evaluates a millage rate of 25 plants on 40% of a property's reasonable worth and licenses an exclusion of $2,500 for this sort of property is ascertained as takes after:

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Tax Bill Calculation Market Value $120,000 duplicated by Assessment Ratio x .40 approaches Assessed Value $48,000 less Exemptions (if any) - $2,500 squares with Taxable Value $45,500 separated by 1000  1000 times Millage Rate x 25 breaks even with Property Tax $1,137.50

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Mill Rate Dollars per Dollars per Hundred Thousand School 40 factories $4.00 $40.00 region City 30 3.00 30.00 County 10 1.00 10.00 Total 80 factories $8.00 $80.00 Expressing Property Tax Rates

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Calculations utilizing Mills Tax evaluated esteem Assessed esteem Millage rate (e.g., 80 factories; see past slide) Move decimal: 85 factories = .085 215 plants = .215 5 plants = .005 Result: Tax Bill

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Other Taxing Matters Unpaid property charges Assessment advance Property charge exception Property charge varieties Special appraisals

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II. Pay Tax on Sales Ordinary Sales Installment deals

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A. Normal Sales: Basis is the cost initially paid for the home in addition to any expenses paid for shutting. [ Purc. cost + Closing costs +Commission = Basis] Adjusted premise : premise in addition to enhancements . [Basis + Improvements (assuming any) = Adjusted Basis] To compute the addition you should take the deal cost and subtract the offering costs (" sum acknowledged " ) [Selling cost - Selling costs = Amt Realized]. At that point subtract the premise (adj. premise) to decide the increase. [Amt acknowledged – Basis (adj. premise) = Gain (misfortune) on sale]

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Calculation of Gain Purchase cost $90,000; shutting expenses are $500 Basis $ 90,500 Add finishing and fencing for $3,500 Basis $ 94,000 Add room and lavatory for $15,000 Basis $109,000 Sell home for $125,000; deals commissions Amount acknowledged $117,000 and shutting expenses are $8,000 Amount realized $117,000 Less premise - $109,000 Equals pick up $ 8,000

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Capital Gains Tax Rate 15 percent If property held longer than 1 year

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Income Tax Exclusion Sale of important living arrangement Used for 2 of the most recent 5 years Married – bar up to $500,000 increase Single – prohibit up to $250,000 pick up

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Adjusted Sales Price Selling cost of old home Less offering costs Less repair costs Equals balanced deals cost $250,000 - 18,000 - 7,000 $225,000

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III. Different A. Charge Deductions B. Interest Deductions C. Movement Taxes