A Nevada county assessor has determined that a newly constructed commercial building has a replacement cost of $1,200,000, with accumulated depreciation of $200,000, and the underlying land has a full cash value of $300,000. A real estate investor asks her Nevada-licensed broker what the property's assessed value will be for tax purposes. Which of the following correctly states the assessed value?
Correct Answer
B) $455,000
Step 1: determine taxable value under Nevada assessment rules: (replacement cost of improvements - depreciation) + full cash value of land = ($1,200,000 - $200,000) + $300,000 = $1,300,000. Step 2: apply Nevada's 35% assessment ratio: $1,300,000 x 35% = $455,000. Therefore the assessed value is $455,000, which is option B.
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Why the Other Options Are Wrong
Deep Analysis of This Valuation Question
Background Knowledge for Valuation
Real World Application in Valuation
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Related Topics & Key Terms
Key Terms:
Related Concepts
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
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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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