Glossary of Common Property Tax Related TermsMay 3, 2019
If this is your first detailed look into the world of property taxes, you may find some of the terminology confusing. Don’t let that discourage you. The property tax system has been around awhile and has developed a lingo of its own. To help you better understand and navigate this unfamiliar landscape, we’ve compiled a brief property tax glossary, detailing some of the more commonly used terms in the field. Ad valorem “Ad valorem” is a Latin term that means “according to value” and refers to any tax or levy where the amount is dependent on the value of the property.
Assessor A person who calculates the value or quality of a person or thing, especially for purposes of taxation.
Assessed ValueThe assessed value of a property refers to the taxable value of the property. This value takes into consideration the sale prices and inspection details of comparable properties in the area.Base Year ValueThe base year value represents the current market value of a property at the time of construction or purchase. It serves as a benchmark against which future valuation can be measured.ClassificationThe system for categorizing property by use for tax assessment purposes. Examples include residential, commercial, agricultural, and industrial.Corrected AssessmentA corrected assessment refers to a tax amount that results from a re-assessment or a revised assessment. It replaces a property tax bill based on a prior assessment.Escaped AssessmentEscaped assessment refers to any retroactive property tax that should have been assessed previously. This could refer to new construction, transfer of ownership, or any tax that “escaped” assessment during the previous year (for example, a home addition or other improvement to the property). ExemptionRelease from liability for part of a tax debt.
Fair Market Value (a.k.a. Full Cash Value)The dollar amount that a property would be likely to fetch on the open market. This value is mutually agreed upon by buyer and seller and serves the advantage of neither.ImprovementsAn improvement can be any existing structure, new or old, that adds value to the land. Examples include homes, barns, extensions, pavilions, decks, piers, etc. Lien
Seizure or claim on all or part of a property’s value to satisfy a debt.Lien DateThe date on which taxes are collected for the prior fiscal year, or the time at which taxes become a lien on the property.
Mill RateThe millage rate or “mill” typically refers to the property tax rate. From the Latin word for thousandth, it equals 1/1000th. When used to compute property taxes, a home with a taxable value of $250,000 and an assessed mill rate of 1 would result in $250 in taxes. ($250,000 x 0.001 = $250)
New ConstructionAny additional structure or improvement added to a property. Can refer to a new construction or building (such as a guest house or room addition) or to fixtures added to a property since the last lien date.Personal PropertyAny owned property excluding real estate. Examples include automobiles, stocks, jewelry, clothing, precious metals, and pensions.
Real propertyValue of owned land, including standing timber and any minerals or mines on the land.Roll (a.k.a. Assessment Roll)A record of taxable property and property owners for a given tax jurisdiction.Secured PropertySecured property refers to any property that cannot be moved (e.g., land and homes). Secured Tax RateIn California, under Proposition 13, the secured tax rate is limited to 1% of the property’s assessed value (plus any voter-approved bonds or assessments), for the current tax year. The previous year’s secured tax rate s referred to as the unsecured tax rate.We hope this quick review of property tax terminology helps you make more informed choices when buying, selling, or refinancing a home, or when challenging an assessment. To learn more about ways you can save money on your property taxes, visit us at Home Tax Savings.
HomeTaxSavings.com is wholly owned by Assessment Solutions, LLC and was established in 2016 as the nation’s first fully automated and integrated real estate assessment review and appeal system. The principals of HomeTaxSavings.com have worked in the real estate and IT world for over 100 years. Founders Keith McIntosh, Stuart Smith, Rachel Brown and Mandeep Sandhu possess a vast knowledge of the industry with many years of experience. The group is gaining wide popularity having covered The District of Columbia, Maryland, Virginia, Texas, Colorado, Georgia, Florida, California and Washington.Disclaimer: This article is for informational and educational purposes only. The HomeTaxSavings.com website is not a market value appraisal, rather it is an assessment tool.