ValuationProperty_taxMEDIUM
A Louisiana parish assessor is determining the taxable value of a commercial warehouse. The assessor uses the income approach and estimates the property's net operating income at $48,000 per year with a capitalization rate of 8%. The property is NOT eligible for the homestead exemption. What assessed value will the assessor place on this property if the commercial assessment ratio in this parish is 15% of fair market value?
Correct Answer
C) $90,000
Step 1 — Estimate fair market value using income approach: FMV = NOI ÷ Cap Rate = $48,000 ÷ 0.08 = $600,000. Step 2 — Apply commercial assessment ratio: Assessed Value = $600,000 × 15% = $90,000. The homestead exemption does not apply to commercial property, so no further deduction is made. The correct assessed value is $90,000.
Answer Options
A
$60,000B
$72,000C
$90,000D
$80,000Why This Is the Correct Answer
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Why the Other Options Are Wrong
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Deep Analysis of This Valuation Question
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Background Knowledge for Valuation
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Real World Application in Valuation
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Related Topics & Key Terms
Key Terms:
income_approachassessed_valuecapitalization_ratecommercial_propertyproperty_tax
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