A Minnesota residential property has an estimated market value (EMV) of $320,000. After applying the homestead market value exclusion, the taxable market value is $289,600. The homestead classification rate is 1.00% on the first $500,000 of taxable market value, producing the net tax capacity. The local total tax rate is 100% of net tax capacity (i.e., a local tax rate of 1.00). Ignoring referendum market value taxes and state general tax, what is the approximate annual property tax owed on this property?
Correct Answer
B) $2,896.00
Net tax capacity = $289,600 × 1.00% = $2,896. Annual tax = net tax capacity × local tax rate = $2,896 × 1.00 = $2,896.
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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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