A licensed Indiana broker is advising a client who purchased a home for $500,000. The county assessor subsequently assessed the property at $520,000 for property tax purposes. The client insists that the assessed value must equal the purchase price and demands the broker help him challenge the assessment. Which of the following statements best reflects Indiana law regarding assessed value and purchase price?
Correct Answer
A) Indiana assesses property at 100% of market value, and while a recent sale price is strong evidence of market value, the assessor is not legally bound to match the purchase price exactly
Under IC 6-1.1-4-39, Indiana assesses property at 100% of true tax value (market value). While a recent arm's-length sale price is considered strong and highly relevant evidence of market value, Indiana assessors are not legally required to set assessed value exactly equal to the purchase price. The assessor uses the sale as one data point among others (comparable sales, cost approach, income approach) to determine market value. A $520,000 assessment on a $500,000 purchase could be challenged, but the mere fact of a different purchase price does not automatically invalidate the assessment.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
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.
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- → The income approach to appraisal is most commonly used for which type of property?
- → Which formula correctly calculates the capitalization rate?
- → External obsolescence in Oklahoma:
- → The sales comparison approach to appraisal is most appropriate for which type of property?
- → Which of the following correctly lists the three types of depreciation recognized in real estate appraisal?
- → The sales comparison approach to appraisal is most commonly used for which type of property?
- → Which four tests must a use satisfy to qualify as the highest and best use of a property?
- → Three depreciation:
- → Cap rate:
- → Which formula best represents the cost approach to appraisal?
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