Sandra is a real estate salesperson in Mississippi. Her client, David, is comparing two properties: a residential home with a true value of $180,000 and a commercial building with a true value of $180,000. David asks Sandra how the assessed values will differ for ad valorem tax purposes. Which of the following correctly describes the difference in assessed values between the two properties under Mississippi law?
Correct Answer
B) The residential property will be assessed at $18,000 and the commercial property will be assessed at $45,000.
Mississippi applies different assessment ratios to different property classifications. Residential real property is assessed at 10% of true value: $180,000 × 10% = $18,000. Commercial and industrial real property is assessed at 25% of true value: $180,000 × 25% = $45,000. Therefore, despite having identical true values, the commercial building will have a significantly higher assessed value ($45,000) than the residential home ($18,000), resulting in a higher ad valorem tax burden for the commercial property owner.
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