outline04 - Chapter 4 Public Restrictions on Ownership...

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Chapter 4 Public Restrictions on Ownership Lecture Outline Four basic powers of government over real property Taxation Escheat Eminent domain Police power Property Tax—Ad Valorem Tax The property tax is an “ad valorem” tax, which means that it is levied in proportion to the value of the property. Property taxes are expressed in millage rates, where one mill is equal to $1 of tax per $1,000 of value Some jurisdictions choose to tax only a portion of a property’s market value and therefore multiply the market value of each property by an assessment ratio. Additionally, some jurisdictions exempt a portion of some properties’ value from taxation. For example, the first $25,000 of the value of homestead properties (residences of the property owners) in Florida is exempt from taxation. The tax bill for a property with a market value of $120,000 in a jurisdiction that assesses a millage rate of 25 mills on 40 percent of a property’s market value and permits a exemption of $2,500 for this type of property is calculated as follows: Market Value $120,000 multiplied by Assessment Ratio × .40 equals Assessed Value $48,000 minus Exemptions (if any) –$2,500 equals Taxable Value $45,500 divided by 1000 ÷ 1000 times Millage Rate × 25 equals Property Tax
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outline04 - Chapter 4 Public Restrictions on Ownership...

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