CONT 110

TAXES

TERMS

• Assessed Rate• An arbitrary rate set by the taxing body

• Assessed Value• Amount of money for which property is listed in the public tax records for tax purposes

• Assessor• Elected or appointed public official responsible for the collection of property tax

• Market value• Amount of money property would sell for in a competitive open market

• Mill• Unit in which tax rate is expressed; 1/10 of a cent, or 1/1,000 of a dollar

• Personal Property• Possessions such as jewelry, autos, boats, and furniture

• Property Tax• Tax imposed on a property owner to help fund public services

• Real Property• Property such as land and buildings

• Tax• Amount of money paid by a property owner

• Tax Rate• Percent set by the taxing body that is used to calculate tax owned

ESCROW ACCOUNT

• Often, property taxes are not paid directly by the property owner, but by the mortgage company.• An escrow account escrow account is an account created by the

lender to hold money, collected monthly along with the property owner’s mortgage payment, to insure that property taxes get paid.

CALCULATE THE TAX ON PROPERTY BASED ON THE ASSESSED VALUE

• Example 1:• The property in Miller County is assessed at 50% of a

market value with a tax rate of $5.95 per $100 valuation. Mr. Jones owns a farm with a market value of $400,000. Determine the amount of property tax he is required to pay annually.• Steps

• Multiply the market value of the property by the assessed rate• $400,000 x 50% = $200,000 assessed valueassessed value

• Determine the numbers of $100s in the assessed value• $200,000 / $100 = 2,000

• Multiply the number of $100s by the tax rate per $100 to determine the amount of tax due• 2,000 x $5.95 = $11,900 property tax dueproperty tax due

CALCULATE THE TAX ON PROPERTY BASED ON THE ASSESSED VALUE

• Example 2:• In some areas, the tax rate is levied as the number of

dollars per $1,000. If the tax rate is $3.80 per $1,000, determine the amount of annual tax for a property having an assessed value of $149,000.• Steps

• Divide the market value of the property by $1,000 to determine the number of thousands• $149,000 / $1,000 = 149

• Multiply the tax rate per thousand ($3.80) by the number of 1,000s to determine the amount of tax due.• 149 x $3.80 = $566.20 property tax dueproperty tax due

CALCULATE THE TAX ON PROPERTY BASED ON THE ASSESSED VALUE

• Example 3:• In some areas, the tax rate is levied in mills. A mill is

one-thousandth of a dollar. If the tax rate is 22 mills, divide 22 by 1,000 then multiply that answer by the assessed value. Determine the amount of annual tax for a property having an assessed value of $118,000.

• Steps• Convert the tax rate in mills to dollars

• 22 mills / 1,000 = $0.022 tax rate in dollarstax rate in dollars

• Multiply the assessed value of the property by the tax rate in dollars.• $118,000 x $0.022 = $2,596 property tax dueproperty tax due

EXAMPLE

• Suppose Bowie County needs $50 million to complete repairs on all county roads. All the real property (buildings and land) in the county has been assessed at $1,000,000,000. Find the property tax rate needed to raise $50 million.• Steps• Divide the amount of money needed by the total assessed

value of all the property.• $50,000,000 / $1,000,000,000 = 0.05 or 5% tax ratetax rate

CALCULATE PROPERTY TAX DUE BASED ON EACH $100 OF ASSESSED VALUATION