A developer in Kansas City, Missouri owns a strip mall with a true market value of $2,000,000. A neighboring homeowner's residence has a true market value of $200,000. If both properties are subject to the same tax levy rate, which statement correctly describes the relationship between their assessed values under Missouri law?
Correct Answer
A) The strip mall's assessed value is $640,000 and the home's assessed value is $38,000.
Missouri uses a tiered assessment system with different ratios for different property classifications. The commercial strip mall is assessed at 32% of true value: $2,000,000 × 32% = $640,000. The residential home is assessed at 19% of true value: $200,000 × 19% = $38,000. Both figures in option A are mathematically correct and reflect the proper Missouri classification ratios.
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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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- → 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:
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- → 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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