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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Related Topics & Key Terms
Key Terms:
Related Concepts
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
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.
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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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