A licensed Arkansas real estate agent is helping a buyer named Marcus compare two properties. Property A has a true market value of $300,000, and Property B has a true market value of $150,000. Marcus asks the agent how Arkansas determines the taxable value used to calculate property taxes. Which explanation is correct?
Correct Answer
A) Arkansas assesses property at 20% of market value, so Property A's taxable base is $60,000 and Property B's is $30,000.
Arkansas law (Ark. Code Ann. § 26-26-101 et seq.) requires that real property be assessed at 20% of its true market value. For Property A: $300,000 × 20% = $60,000. For Property B: $150,000 × 20% = $30,000. The millage rate is then applied to these assessed values to determine the annual tax bills.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
Highest and best use is an appraisal concept that identifies the most profitable, legally permitted, physically possible, and financially feasible use of a property. It is the foundation of all property valuation.
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Previous Question
James owns a farm in rural Izard County, Arkansas, where he lives with his family. He wants to know the maximum acreage that can be protected under the Arkansas homestead exemption for his rural property. Which of the following correctly states the rural homestead acreage limit?
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