A closing is scheduled for a $625,500 residential property in Springfield, Massachusetts. The purchase price does not divide evenly by $1,000, resulting in a fractional unit. How should the Massachusetts deed excise tax be calculated on the $500 fraction remaining after dividing by $1,000?
Correct Answer
A) The $500 fraction is rounded up to a full $1,000 unit and taxed at the full rate of $4.56, just like a complete $1,000 unit.
Under MGL Chapter 64D, the deed excise tax rate of $4.56 applies to each $1,000 'or fraction thereof' of the consideration. The phrase 'or fraction thereof' means that any amount remaining after dividing by $1,000 — no matter how small — is rounded up to a full $1,000 unit and taxed at the full $4.56 rate. For a $625,500 purchase: 625 full units × $4.56 = $2,850.00, plus 1 additional unit for the $500 fraction × $4.56 = $4.56, for a total of $2,854.56.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Valuation Question
Background Knowledge for Valuation
Real World Application in Valuation
Related Topics & Key Terms
Key Terms:
More Valuation Questions
Example of economic obsolescence in real estate?
Who typically hires the appraiser in a real estate transaction?
Which appraisal report type do California lenders commonly rely on for single-family residence financing?
Return of an investor’s investment is provided for through:
All of the following are one of the four important elements of value, except:
- → Under the replacement cost approach of appraisal, an appraiser is least interested in:
- → The appraisal process which allocates a percentage of a property’s total value to the land and a percentage to the improvements is known as:
- → Which Tennessee government body is primarily responsible for appraising real property for ad valorem tax purposes at the local level?
- → A property's value decreased because a noisy highway was built nearby. This is an example of:
- → Which of the following is the least important factor used to determine the market value of a property?
- → In Texas, a comparative market analysis (CMA) can be prepared by:
- → All of the following have a specific dollar value, except:
- → In which appraisal approach to value would the value for the land be calculated separately?
- → In Texas, functional obsolescence includes:
- → A capitalization rate of 8% on a property with $40,000 NOI indicates a value of: