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Chapter 15—Taxes and Assessments
MULTIPLE CHOICE
1. Property taxes are
a.
levied according to square footage.
b.
a lien until paid.
c.
based on income of the owner.
d.
an encroachment until paid.
2. Plottage is likely to have which of the following results?
a.
Raising the tax bill
b.
Raising the tax rate
c.
Accelerating the lien date
d.
Lowering the tax bill
3. A city or county sponsored public improvement is most appropriately financed by
a.
general property taxes.
b.
an improvement district.
c.
an assessment district.
d.
federal income taxes.
4. All of the following benefit from property taxes EXCEPT
a.
school budget.
b.
municipal stadium.
c.
public libraries.
d.
parks.
5. What is the most correct meaning of the term “ad valorem”?
a.
Appraised value
b.
Property tax
c.
According to the value
d.
And wife
6. Taxes become a lien
a.
in advance.
b.
only when delinquent.
c.
in arrears.
d.
when an assessment appeal is filed.
7. How is the priority of property tax liens established?
a.
By the county tax assessor’s decision which is final
b.
By the amount of the lien compared to others
c.
They have priority no matter when recorded
d.
By the date of recording
8. If an owner’s semiannual property taxes on a $90,000 home are $840 and the house is assessed at 80%
of value, what is the tax rate per thousand dollars of evaluation?
a.
$11.66
b.
$18.66
c.
$23.33
d.
$720.00
9. A lot measured 50’ on a county road and 80’ deep. The county assessor valued the lot at $15,000.
The tax rate is $100 per front foot. The tax bill is
a.
$1,500.
b.
$5,000.
c.
$8,000.
d.
incalculable without the millage rate.
10. If a home sold for $124,000 and was assessed at 80% of its value, how much would the property taxes
be at a rate of $18.20 per thousand dollars of assessed value?
a.
$992.00
b.
$1,444.35
c.
$1,805.44
d.
$2,256.80
11. A property is assessed at $25,000. With a tax rate of $2.50 per hundred, what will the taxes be?
a.
$100
b.
$625
c.
$1,000
d.
$6,250
12. The tax rate on a property is $3.32 per $100 of assessed valuation. The assessed value is $55,864.
What is the annual tax payment? (round to the nearest dollar)
a.
$185
b.
$594
c.
$592
d.
$1,855
13. When a home owner feels his property has been assessed too high and files an appeal, the burden of
proof is on the
a.
appraiser chosen by the home owner.
b.
assessor’s staff appraiser.
c.
homeowner.
d.
county supervisor.
14. A municipality is installing new sidewalks in a neighborhood. The cost of this project would most
likely be paid for by means of
a.
individual contracts with property owners.
b.
income taxes.
c.
a dedication.
d.
a special assessment.
15. The theory of special assessment allocation is that the improvement benefits the
a.
land in the district.
b.
structures in the county.
c.
people in the equalization area.
d.
businesses in the district.
16. The following public improvements would most probably be funded by a special assessment EXCEPT
a.
installation of street lights.
b.
curbs.
c.
reconstruction of city sewage plant.
d.
widening of neighborhood streets.
17. In a special assessment district, which occurs first?
a.
Bonding
b.
Hearing
c.
Confirmation
d.
Assessment collection
18. All of the following may be considered in calculating the cost basis of a property in a capital gain tax
computation EXCEPT
a.
purchase price.
b.
repairs or maintenance.
c.
landscaping.
d.
improvements.
19. A home with a cost basis of $40,800 in 2005 is resold today for $90,000. Commissions and closing
expenses are $6,300. What is the gain on the sale?
a.
$6,300
b.
$42,900
c.
$83,700
d.
$82,600
20. A woman sold her residence of 3 years for $96,500 and immediately invested in another residence at a
sales price of $150,000. Assuming a basis of $46,500 in the original property, how much taxable gain
will she have to report on this sale?
a.
$7,000
b.
$53,500
c.
$46,500
d.
None of the above
21. A home with a cost basis of $40,800 in 2003 is resold today for $80,000. Commissions and closing
expenses are $5,600. What is the adjusted sales price?
a.
$5,600
b.
$33,600
c.
$72,300
d.
$74,400
22. In order to determine taxable gain on a residence, the
a.
basis must be subtracted from the amount realized from the sale.
b.
closing costs are subtracted from the sale price.
c.
basis and the amount realized from the sale must be the same.
d.
sales price is subtracted from the basis.
23. Persons wishing to defer federal income tax on the sale of a personal residence must have lived in the
residence
a.
180 days.
b.
six months.
c.
one year.
d.
two years of the last five.
24. An investor sells his real property using an installment sale. His capital gains tax would be due
a.
never, if he owned the property for more than one year.
b.
after the last installment s paid.
c.
the year of the sale.
d.
as he receives the payments.
25. Local government programs and services are financed primarily through
a.
property taxes.
b.
federal income taxes.
c.
state income taxes.
d.
state sales taxes.
26. Taxes on real property are levied
a.
on an ad valorem basis.
b.
according to the value of the property.
c.
both a and b.
d.
neither a nor b.
27. The assessment ratio of real property in a community may be
a.
100 percent of its appraised value.
b.
more than its fair market value.
c.
more than its appraised value.
d.
any of the above.
28. Tax rates may be expressed as
a.
a millage rate.
b.
dollars of tax per hundred dollars of valuation.
c.
dollars of tax per thousand dollars of valuation.
d.
any of the above.
29. Which of the following would be the highest tax rate?
a.
38 mills
b.
$3.80./$100
c.
$38/$1,000
d.
no difference
30. Records of the assessed valuations of all properties within a jurisdiction are known as
a.
appraisal rolls.
b.
allocation rolls.
c.
appropriation rolls.
d.
assessment rolls.
TRUE/FALSE
1. Publicly available books that show assessed valuations are called assessment valuation books.
2. The amount of property taxes an owner pays is determined by the services provided by the city or
county.
3. Real property taxes are levied by the government and become a lien monthly.
4. The property tax rate may be expressed as a mill rate, dollars per thousand or dollars per hundred.
5. When a special assessment tax is imposed by a municipality for new neighborhood streets and the bill
is not paid within the allotted time, the lien automatically goes to bond and is payable over 30 years.
6. If the property taxes are not paid, the property is sold at a public auction.
7. If a property owner feels over assessed, he would file a complaint with the tax certification board.
8. The cost of installing a residential street in a city will most likely be paid by means of special
assessment.
9. In calculating “basis” for income tax purposes, one must take into consideration the market value of
similar properties.
10. Local government programs and services are financed primarily through state income taxes.
11. Taxes on real property are levied on an ad valorem basis.
12. A document issued at a tax sale that entitles the purchaser to a deed at a later date if the is not
redeemed is known as a tax deed.
13. Long-term capital gain is a preferential income tax treatment on the sale of an appreciated asset.
14. The property tax rate expressed in tenths of a cent per hundred dollars of assessed valuation is called
the mill rate.
15. A fee or tax on deeds and other documents payable at the time of recordation is known as a special
assessment fee.
16. The sale of an appreciated property structured to spread out the payment of income taxes on the gain is
called the installment method.
17. The appropriation appeals board hears complaints from property owners regarding their assessments.
18. A municipality is installing all new traffic signals. The cost of this project would most likely be paid
for by means of a bond issue.
19. In some states the board of equalization equalizes assessment procedures between counties.
20. A public improvement benefits the general public and is financed through a general property tax.
COMPLETION
1. When local budgets along with a list of sources from which the money will be derived, is enacted into
law, it is called the ____________________ process.
2. The assessed value of all lands and buildings are made available for public inspection in what is
known as the ____________________ rolls.
3. In some states, the board of ____________________ performs the task of equalizing assessment
procedures between counties.
4. In a residential neighborhood, the assessment for installation of storm sewers, curbs, and gutters is
made on a _________________________ basis.
5. The first step in determining the amount of taxable gain upon the sale of an owner-occupied residence
is to calculate the home’s ____________________.
6. In calculating the gain on the sale of a residence for income tax purposes, it is necessary to calculate
the amount ____________________ from the sale.
7. For income tax purposes, a single taxpayer can exclude up to ____________________ of gain from
the sale of the taxpayer’s principal residence.
8. The property tax rate that is expressed in tenths of a cent per dollar of assessed valuation is called the
____________________ rate.
9. A charge or hold by the government against a property to ensure the payment of taxes is called a
____________________.
10. The sale of an appreciated property structured to spread out the payment of income taxes on the gain is
called a(n) ____________________ sale.
MATCHING
Choose the one most appropriate answer for each.
a.
adjusted sales price
k.
front-foot basis
b.
ad valorem tax
l.
improvement district
c.
amount realized
m.
installment method
d.
appropriation process
n.
long-term capital gain
e.
assessed value
o.
mill rate
f.
assessment appeal board
p.
public improvement
g.
assessment roll
q.
special assessments
h.
basis
r.
tax certificate
i.
conveyance tax
s.
tax deed
j.
documentary tax
t.
tax lien
1. a tax expressed in tenths of a cent per dollar of assessed valuation
2. according to value
3. a document issued at a tax sale that entitles the purchaser to a deed at a later date if the is not redeemed
4. the enactment of a taxing body’s budget and sources of money into law
5. a book that contains the assessed value of each property in the taxing district
6. a document conveying to property purchased at a tax sale
7. a value placed on a property for the purpose of taxation
8. assessments levied to provide publicly built improvements that will primarily benefit property owners
within a small geographical area
9. a charge or levy based directly on the measured distance that a parcel of land abuts a street
10. sales price of a property less fix-up costs and sales commissions, closing and other selling costs
11. a preferential income tax treatment on the sale of an appreciated asset before 1987
12. sale of an appreciated property structured to spread out the payment of income taxes on the gain
13. hears complaints from property owners regarding their assessments
14. a state or local tax charged on deeds at the time of recording
15. the geographical area which will be assessed for a local improvement
16. an improvement that benefits the public at large and is therefore financed by general property taxes
17. a charge or hold by a government against property to ensure the payment of taxes
18. the price paid for property; used in calculating income taxes
19. a fee or tax on deeds and other documents payable at the time of recordation
20. selling price of a home less selling expenses
