IAAO Course 101 Review
Tax Rate (def.) - Answer-Percent of assessed value at which each property is taxed in a given district.
Tax Rate (formula) - Answer-Tax revenue (amount) / Assessed value
Property Tax (formula) - Answer-Subject assessed value / Tax rate
Budget Revenue (formula) - Answer-Total budget - Other taxes
Effective Tax Rate (def.) - Answer-Reflects the relationship between total property taxes on real property
and the property's market value.
Effective Tax Rate (formula) - Answer-Assessment ratio (level) X Tax rate
Jurisdictions tax rate is derived by (formula) - Answer-Budget revenue (budget -other taxes) / Assessed
value
Assessment Ratio (def.) - Answer-Estimated fractional relationship between the assessed values and
market values of a group of properties.
Assessment Ratio (formula) - Answer-Assessed value / Market value
Neighborhood Life Cycle - Answer-Growth, Stability, Decline & Revitalization
, Principle of Conformity - Answer-Value of a property depends on its relationship to its surroundings;
maximum market value is achieved when reasonable similarity among improvements in the
neighborhood.
Principle of Competition - Answer-Created by the potential for profits; availability must be in harmony
with demand; if one or the other is in excess prices will decrease or increase.
Principle of Balance - Answer-Applied to an individual property; maximum value is obtained when the
four agents of production are balanced - land, labor, capital and management.
Principle of Change - Answer-Market value is never constant; estimate of market value is only valid as of
a specific date & changes in the market will impact future value estimates.
Principle of Anticipation - Answer-Value created by the expected future benefits from the property;
related to the Principle of Change.
Principle of Consistent Use - Answer-Property must be valued with a single use for the entire property;
land cannot be valued with one use and improvements with another.
Principle of Contribution - Answer-Value of component depends on its contribution to the whole; basis
for adjustments in the sales comparison approach.
Principle of Supply - Answer-Amount of product producers are willing to sell under various conditions
during a given period.
Principle of Demand - Answer-Amount of product producers are willing and able to buy during a given
period; given the choices available.
Tax Rate (def.) - Answer-Percent of assessed value at which each property is taxed in a given district.
Tax Rate (formula) - Answer-Tax revenue (amount) / Assessed value
Property Tax (formula) - Answer-Subject assessed value / Tax rate
Budget Revenue (formula) - Answer-Total budget - Other taxes
Effective Tax Rate (def.) - Answer-Reflects the relationship between total property taxes on real property
and the property's market value.
Effective Tax Rate (formula) - Answer-Assessment ratio (level) X Tax rate
Jurisdictions tax rate is derived by (formula) - Answer-Budget revenue (budget -other taxes) / Assessed
value
Assessment Ratio (def.) - Answer-Estimated fractional relationship between the assessed values and
market values of a group of properties.
Assessment Ratio (formula) - Answer-Assessed value / Market value
Neighborhood Life Cycle - Answer-Growth, Stability, Decline & Revitalization
, Principle of Conformity - Answer-Value of a property depends on its relationship to its surroundings;
maximum market value is achieved when reasonable similarity among improvements in the
neighborhood.
Principle of Competition - Answer-Created by the potential for profits; availability must be in harmony
with demand; if one or the other is in excess prices will decrease or increase.
Principle of Balance - Answer-Applied to an individual property; maximum value is obtained when the
four agents of production are balanced - land, labor, capital and management.
Principle of Change - Answer-Market value is never constant; estimate of market value is only valid as of
a specific date & changes in the market will impact future value estimates.
Principle of Anticipation - Answer-Value created by the expected future benefits from the property;
related to the Principle of Change.
Principle of Consistent Use - Answer-Property must be valued with a single use for the entire property;
land cannot be valued with one use and improvements with another.
Principle of Contribution - Answer-Value of component depends on its contribution to the whole; basis
for adjustments in the sales comparison approach.
Principle of Supply - Answer-Amount of product producers are willing to sell under various conditions
during a given period.
Principle of Demand - Answer-Amount of product producers are willing and able to buy during a given
period; given the choices available.
