IAAO 500 Flashcards

Terms Definitions
Property
the right of any person to possess, use, enjoy, and dispose of a thing. Concept is commonly referred to as the bundle of rights. A term that expresses a relationship between persons and their rights of possession.
Real Property
the sum of tangible and intangible rights in land and improvements on the land. Refers to the rights, benefits, and interest inherent in ownership of real estate.
Real Estate
the physical land and everything permanently attached to it.
Personal Property
any property that is not realty; it is all movable items not permanently affixed to or part of the real estate, also known as personalty or chattels.
"Affixed"
used to distinguish between real property and personal property.
Tangible Property
actual physical property.
Intangible Property
evidence of ownership of property rights. Ex. notes mortgages, copyrights, leaseholds, patent rights, deeds of trust, computer software, and stock certificates.
Due to diverse nature of personal property, most jurisdictions find it expedient to combine tangible personal property into various categories such as:
1.- furniture, fixtures, & equipment2.- machinery3.- inventory4.- livestock
"Soldiers and Sailors Civil Relief Act of 1940"
provides military personnel, while on active duty and stationed away from their permanent homes, may yet enjoy the full rights and responsibilities of citizenship in their home states, counties, and cities.
Fixture
courts have not agreed on the definition of this term
The assessor carries out the following functions in preparing the assessment roll:
1.- discovery and identification of property2.- inventory of property3.- determination of extent of taxability (situs)4.- classification (real, personal, exempt, etc.)5.- estimation of market value of property (appraisal)6.- calculation of assessed value of property7.- preparation of assessment roll8.- notification to owners of assessed value9.- defense of value estimates on appeals
Inventory (personal property)
goods held for resale, raw materials, goods in process, finished goods, supplies, consigned goods, bill and hold goods, floor planned goods, and in-transit goods.
Intangibles (personal property)
(having no intrinsic marketable value), such as stocks, bonds, notes, mortgages, royalties, checking and savings accounts, cash on hand, accounts receivable, court judgements, goodwill, patents, and franchises.
Fixed Assets (personal property)
such as signs; storage tanks; expensed equipment; automotive equipment; leasehold improvements; machinery and equipment; furniture and fixtures; leased or rented items; construction in process; small or "perishable" tools; tools, dies, jigs and patterns, etc.
Situs
the appropriate location of property for assessment and taxation purposes, is an especially important issue in personal property taxation. (location, location, location)
Stationary Property
property more or less permanently located at a business premise, is always subject to taxation where located.
Business Premises
according to statues, transitory or movable property such as boats, vehicles, aircraft, mobile homes, and construction equipment has to have a more or less permanent situs from which it operates.
In-Transit Property
property moving interstate by common carrier or some private means of conveyance is generally covered by federal Interstate Commerce Commission (ICC) regulations and cannot be taxed by the assessor.
Ad Valorem Tax
the property tax is proportional to market value: the more a property is worth on the market, the greater the proportion of tax levied against it.
Nominal Tax Rate
based on the spending requirements of a local tax district, in the form of a budget, and the total assessed value of taxable property within the district.
Value
is the relationship between an object desired and a potential owner.
Value (assessment purposes)
the present worth of future benefits arising from the ownership of real or personal property.
Market Price
that amount actually paid or about to be paid in a particular transaction.
Market Value
most probable price expressed in monetary terms that a property would bring if exposed for sale in the open market in an arm's length transaction between a willing seller and a willing buyer, both of whom are knowledgeable concerning all the uses to which it is adapted and for which it is capable of being used.
For a property to have value, it must have:
1.- utility2.- scarcity3.- desirability4.- transferability
Effective Demand
desirability must be bacled up by purchasing power (the ability to pay).
Trade Level
refers to the production and distribution stages of a product.
There are 3 distinct levels of trade:
1.- manufacturing level2.- wholesale level3.- retail level
Mark-Up
an amount added to a cost's price in calculating a selling price to account for overhead and profit. Mark-up may include freight, handling, display, warehousing, sales commissions, profit, etc, which are normal business expenses in merchandising.
Value-in-Use
is the calue of property for a specific use. It embodies that an object's value is related to its use.
Value-in-Exchange
is the amount an informed purchaser would offer in exchange for property under even market conditions. It's market determined, based on comparison to other substitiute goods and services in a competitive open market.
Highest and Best Use
each item of property should be assessed as though it were being put to its perceived most profitable use given probable legal, physical, and financial constraints.
Supply and Demand
the market value of property depends on the amount that would be purchased as compared to the amount offered for sale in a given period at different prices. An increase in supply will lower prices; an increase in demand will increase prices. Supply and demand are affected by social trends, government policy, and economic forces.
Change
holds that the future, not the past, is of prime importance in estimating value because the factors that once influenced supply and demand alter over time.
Balance
maintaining that all markets have a tendency to move toward an equilibrium after a change occurs in factors influencing supply or demand.
Substitution**
the rational buyer will pay no more for a property than the cost of a reasonably similar alternative.
Contribution
the value of a part of the property is determined by how much it contributes to the value of the entire property--not by its cost alone.
Competition
the potential to make a profit or get a bargain attracts new suppliers and sellers.
Anticipation
market value is affected by future benefits that the market expects to be derived from a property.
Conformity
the value of a property depends in part on its compatibility with its surroundings.
Increasing and Decreasing Marginal Returns
when improvements are added to a property, future benefits will increase up to a certain point, after which the addition of improvements will have a diminishing effect or even decrease value.
The Appraisal Process
1.- definition of the problem2.- preliminary survey and planning3.- data collection and analusis4.- application of data5.- reconciliation and final value estimate
Mass Appraisal
the valuation of many properties as of the same given date, using a standard procedure.
Fee Appraisal
or single-property appraisal, the the valuation of a particular property at a particular date.
Four majpr categories of personal property:
1.- Inventories2.- Fixed Assets3.- Leasehold Improvements4.- Intangibles
Inventories
1.- Goods Held for Sale (Resale)2.- Raw Materials3.- Goods in Process4.- Finished Goods5.- Supplies6.- Consigned Goods7.- Good & Hold Goods8.- Floor Planned Goods9.- In Transit goods
Fixed Assets
1.- Machinery & Equipment2.- Furniture & Fixtures3.- Trade Fixtures4.- Aircraft, Motor Vehicles, Mobile Homes, & Boats5.- Leased Equipment6.- Construction in Progress7.- Tools, Dies, and Jigs
Intangible Personal Property
1.- Copyrights2.- Patents3.- Franchises4.- Goodwill
Common Stock
securities that represent an ownership interest in a corporation; holders receive dividends, when paid, only after the obligations of floating debt, bond interest and preferred stockholders are met.
Preferred Stock
securities that give the holder the privilege of being issued dividends before any common stockholder and also preference in regard to liquidation.
Restricted or Lettered Stock
stock brought under agreement to hold for investment purposes which cannot be sold for a specified time.
Mutual Funds
companies whose objectives are to yield the highest rate of return by investing in the most financially sound stocks, bonds, etc., for either short-term or long-term growth. There are two types of funds:1.- Stock Fund: an investment company which sells its own stock and purchases a diversified portfolio of securities with the proceeds. The company pays dividends on its stock to the stock owners.2.- Trust Fund: an investment company structured under the Massachusetts trust Laws which issues certificates on units of trust and maintains a diversified portfolio of securities (Corpus) with the proceeds. The trust pays interest directly to the investor.
Stock Options
contracts that give the holder the right to buy or sell stock at a set price on or before a specified date.
Stock Warrants
certificates issued by a corporation that represent the right to subscribe to new stock when issued.
Discovery
the process where by the assessor identifies all taxable property in the jurisdiction and ensures that it is included on the assessment roll.
Three major areas should be considered in a discovery program:
1.- Methods of discovery2.- Interpretation of data3.- Situs
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