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    Real Estate Principles Real Estate: An Introduction To The Profession

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    denden007
    This document contains a chapter from a real estate textbook about taxes and assessments. It discusses different types of property taxes like ad valorem taxes, how tax rates are calculated using mills, and how to calculate property taxes based on appraised value and millage rates. It also covers capital gains taxes on real estate, including how to calculate gain or loss, exclusions for primary residences, and key terms related to property taxes.

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    Real Estate Principles Real Estate: An Introduction To The Profession

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    denden007
    17 views12 pages
    This document contains a chapter from a real estate textbook about taxes and assessments. It discusses different types of property taxes like ad valorem taxes, how tax rates are calculated using mills, and how to calculate property taxes based on appraised value and millage rates. It also covers capital gains taxes on real estate, including how to calculate gain or loss, exclusions for primary residences, and key terms related to property taxes.

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    This document contains a chapter from a real estate textbook about taxes and assessments. It discusses different types of property taxes like ad valorem taxes, how tax rates are calculated using mills, and how to calculate property taxes based on appraised value and millage rates. It also covers capital gains taxes on real estate, including how to calculate gain or loss, exclusions for primary residences, and key terms related to property taxes.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    17 views12 pages

    Real Estate Principles Real Estate: An Introduction To The Profession

    Uploaded by

    denden007
    This document contains a chapter from a real estate textbook about taxes and assessments. It discusses different types of property taxes like ad valorem taxes, how tax rates are calculated using mills, and how to calculate property taxes based on appraised value and millage rates. It also covers capital gains taxes on real estate, including how to calculate gain or loss, exclusions for primary residences, and key terms related to property taxes.

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    You are on page 1of 12

    Real Estate Principles

    Ninth Edition

    Real Estate:
    An Introduction to the Profession
    Ninth Edition

    By Charles J. Jacobus
    South-Western Publishing©2002

    South-Western Publishing©2002
    Chapter 15
    _______________________________________

    Taxes and Assessments

    South-Western Publishing©2002
    Property Taxes

    • ad valorem taxes = according to value


    • source of income for local government
    • tax district appraisers all taxable property
    • tax rate calculation

    South-Western Publishing©2002
    Expressing Property Tax Rates
    Mill Rate Dollars per Dollars per
    Hundred Thousand
    School 40 mills $4.00 $40.00
    district
    City 30 3.00 30.00
    Country 10 1.00 10.00
    Total 80 mills $8.00 $80.00

    South-Western Publishing©2002
    Calculations using Mills
    Move decimal: • Tax appraised value
    • 85 mills = .085 • Assessed value
    • 215 mills = 2.15 • Millage rate
    • 5 mills = .005 (e.g., 80 mills;
    see previous slide)

    Result: Tax Bill

    South-Western Publishing©2002
    Other Taxing Matters

    • Unpaid property taxes


    • Assessment appeal
    • Property tax exemption
    • Property tax variations
    • Special assessments

    South-Western Publishing©2002
    Federal Income Tax
    Basis is the price originally paid for
    the home plus any fees paid for
    closing and improvements.

    South-Western Publishing©2002
    Capital Gains

    • To calculate the gain you must take the sale


    price and subtract the selling expenses; then
    subtract the basis to determine the gain.

    South-Western Publishing©2002
    Calculation of Gain
    Purchase price $90,000; closing costs are $500 Basis $ 90,500
    Add landscaping and fencing for $3,500 Basis $ 94,000
    Add bedroom and bathroom for $15,000 Basis $109,000

    Sell home for $125,000; sales commissions Amount realized $117,000


    and closing costs are $8,000

    Amount realized $117,000


    Less basis -$109,000
    Equals gain $ 8,000

    South-Western Publishing©2002
    Income Tax Exclusion

    • Sale of principal residence


    • Used for 2 of the last 5 years
    • Married – exclude up to $500,000 gain
    • Single – exclude up to $250,000 gain

    South-Western Publishing©2002
    Adjusted Sales Price
    Selling price of old home $250,000
    Less selling expenses -18,000
    Less fix-up costs -7,000
    Equals adjusted sales price $225,000

    South-Western Publishing©2002
    Key Terms
    • Adjusted sales price • Installment sale
    • Ad valorem taxes • Documentary tax
    • Assessed value • Mill rate
    • Basis • Tax certificate
    • Tax lien

    South-Western Publishing©2002

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