Highest and best use means the use that is:
Correct Answer
A) Legally permissible, physically possible, financially feasible, and maximally productive
Highest and best use is a foundational appraisal principle identifying the use that meets four tests: legal, physical, financial, and maximum productivity.
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Related Concepts
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
More Valuation Questions
Maria owns a home in Boise, Idaho that serves as her primary residence. She wants to reduce her property tax burden by taking advantage of Idaho's homeowner exemption. Under Idaho law, what is the maximum amount of assessed value that can be exempted from property taxation under the homeowner's exemption?
A New Hampshire licensee is listing a 75-acre parcel that has been in the Current Use program for 15 years. The seller informs the licensee that he enrolled the land himself and has never paid a Current Use enrollment fee. The buyer intends to keep the land as open space and wants to maintain its Current Use status after closing. Which of the following statements most accurately describes the situation the licensee must disclose and advise upon?
Leilani is a licensed Hawaii real estate salesperson helping a buyer purchase a property registered in the Land Court system in Honolulu. When discussing property taxes, the buyer asks whether the Land Court registration of the property affects how it is assessed for property tax purposes compared to a property in the Regular System (Bureau of Conveyances). Which response is most accurate?
A homeowner in Portland receives her annual property tax statement. The county assessor lists her property's Real Market Value (RMV) at $480,000 and her Maximum Assessed Value (MAV) at $310,000. Which value will the county use to calculate her property tax bill?
Dorothy, age 72, owns her home in Henrico County, Virginia. Her annual household income is $28,000 and her net worth (excluding her home) is $85,000. She applies for Virginia's elderly and disabled property tax relief program. Which statement best describes how Virginia's program works?
- → Which formula best represents the cost approach to appraisal?
- → Which appraisal method is most commonly used for residential properties and relies on recent sales of comparable properties?
- → The sales comparison approach to appraisal is most commonly used for which type of property?
- → Susan sells her luxury waterfront home in Kirkland for $2,000,000. Using Washington's current graduated state REET schedule under RCW 82.45 (1.1% on the first $525,000; 1.28% on the portion from $525,000.01 to $1,525,000; 2.75% on the portion from $1,525,000.01 to $3,025,000; 3% above $3,025,000), what is the state REET owed on this sale (excluding any local REET)?
- → James owns a farm in rural Tennessee that qualifies for the Greenbelt Law. Under Tennessee's Greenbelt Law, how is agricultural land assessed for property tax purposes?
- → Highest and best use:
- → The sales comparison approach adjusts for differences by:
- → In the sales comparison approach to appraisal, adjustments are made to which properties?
- → The market approach (sales comparison approach) to property valuation is most reliable for:
- → A Minnesota homeowner has lived in their home for five years and has always received homestead classification. This year, the homeowner rents out their home for the entire year while temporarily relocating to another state for a work assignment and intends to return. The county assessor discovers the homeowner no longer occupies the property and reclassifies it as non-homestead. Which of the following statements is most accurate regarding this reclassification?
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