Ad Valorem Taxes and Property Categories

Ad valorem taxes are levied based on property value, with different classes for taxation depending on the type of property. Real property is categorized into urban, rural, suburban, and assessed as of January 1st for the tax year. The taxation formula includes true value, assessment ratio, and millage rate.

• Ad Valorem Taxes
• Property Categories
• Taxation
• Real Property
• Assessment

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Presentation Transcript

1. AD VALOREM TAXES

2. Define Ad Valorem The phrase ad valorem is Latin for according to value

3. What is Taxed Section 27-35-4 Class I Property: Single Family Owner Occupied Residential (10% of true value) Class II Property: All Real Property that is not Class I (15% of true value) Class III Property: Business Property furniture and fixtures; inventory (15% of true value) Required to be annually appraised at true value

4. What is Taxed (cont.) Section 27-35-4 Class IV Property Public Utilities (30% of true value) Class V Property Motor Vehicles cars, trucks, motor homes, mobile homes (30% of true value)

5. Real Property Categories Urban Land Heavily populated areas within the corporate limits of a city where buildings are concentrated and land ownership is in small parcels Principal uses are residential, commercial, and industrial Rural Land Less populated areas outside the city limits Rural land ownership is usually in large acreage tracts Principal uses are agricultural and residential

6. Real Property Categories (cont.) Suburban Land Fringe areas lying between urban and rural categories. Generally lying outside the corporate limits of a city, but not remote from concentrated population areas Area into which new residential subdivision, shopping centers, and industrial parks are developing and growing

7. Real Property Categories (cont.) Suburban Land Fringe area that is no longer urban or rural but rather a little of each Principal uses are for the most part the same as those of urban land Ownership and assessment of real property is as of January 1stof the tax year and payable the next year Example: Taxable: January 1, 2010 Payable: December 26, 2010 -- February 1, 2011

8. How Are These Classes Taxed? Basic Formula True Value x % (Ratio set by law) Assessed Value x Millage Rate Gross Taxes

9. What is a Mill & How is it Calculated? A mill is a unit used in calculating money but is not a coin. A mill is tenth of a penny or a thousand of a dollar. A tenth of one dollar or a dime is written $.10 A hundredth of one dollar or a penny is written $.01 One mill is a thousand of one dollar and is written $.001

10. Calculation Example A Class Two Property has a true value of $75,000 and is in a Taxing District in which the Tax Levy is 117.72 Mills. Calculate the Tax Bill. 117.72 Mills = $.11772 True Value = $75,000 Class 2 Ratio = x 0.15 Assessed Value = $ 11,250 Mill Rate = x 0.11772 Tax Bill = $ 1,324.35

11. Homestead Exemption Section 27-33-67 (1) (Regular Homestead) Homeowner under sixty-five (65) years of age on January 1 of the year for which the exemption is claimed, and who is not totally disabled shall be exempt from ad valorem taxes in the amount prescribed in Section 27-33-75 One-half (1/2) of the exemption allowed shall be from taxes levied for school district purposes and one-half shall be from taxies levied for county general fund Section 27-33-75 Regular Homestead Exemption Table

12. Reg. Homestead $7,500 Table Assessed Value of Homestead $ Credit $1 $150 $6 $151 $300 $12 $301 $450 $18 $451 $600 $24 $601 $750 $30 $751 $900 $36 $901 $1,050 $42 $1,051 $1,200 $48 $1,201 $1,350 $54 $1,351 $1,500 $60 $1,351 $1,650 $66 $1,501 $1,800 $72 $1,651 $1,950 $78 $1,801 $2,100 $84 $1,951 $2,250 $90

13. Assessed Value of Homestead $ Credit $2,101 $2,400 $96 $2,251 $2,550 $102 $2,401 $2,700 $108 $2,551 $2,850 $114 $2,701 $3,000 $120 $2,851 $3,150 $126 $3,001 $3,300 $132 $3,151 $3,450 $138 $3,301 $3,600 $144 $3,451 $3,750 $150 $3,601 $3,900 $156 $3,751 $4,050 $162 $3,901 $4,200 $168 $4,051 $4,350 $174 $4,201 $4,500 $180 $4,351 $4,650 $186 $4,501 $4,800 $192 $4,801 $4,950 $198 $4,951 $5,100 $204 $5,101 $5,250 $210

14. Assessed Value of Homestead $ Credit $5,251 $5,400 $216 $5,401 $5,550 $222 $5,551 $5,700 $228 $5,701 $5,850 $234 $5,851 $6,000 $240 $6,001 $6,150 $246 $6,151 $6,300 $252 $6,301 $6,450 $258 $6,451 $6,600 $264 $6,601 $6,750 $270 $6,751 $6,900 $276 $6,901 $7,050 $282 $7,051 $7,200 $288 $7,201 $7,350 $294 $7,351 $7,500 $300

15. Example Regular Homestead City School County Total Tax True Value Class I 100,000 100,000 100,000 100,000 Ratio .10 .10 .10 .10 Assessed Value 10,000 10,000 10,000 10,000 Millage Rate .025 .050 .050 .125 Gross Tax 250 500 500 1250 Homestead (0) (150) (150) (300) Net Tax Due 250 350 350 950

16. Homestead Exemption (cont.) Section 27-33-67 (2) (Special Homestead) Each qualified homeowner who has reached sixty- five (65) years of age on or before January 1 of the year for which the exemption is claimed or who is totally disable as herein defined shall be exempt from ad valorem taxes for up to $7,500 in assessed value

17. Example Special Homestead City School County Total True Value Class I 100,000 100,000 100,000 100,000 Ratio .10 .10 .10 .10 Assessed Value 10,000 10,000 10,000 10,000 Millage Rate .025 .050 .050 .125 Gross Tax 250 500 500 1250 Homestead - Special (187.50) (375) (375) (937.50) Net Tax Due 62.50 125 125 312.50

18. Example No Homestead (Class II Property) City School County Total True Value Class II 100,000 100,000 100,000 100,000 Ratio .15 .15 .15 .15 Assessed Value 15,000 15,000 15,000 15,000 Millage Rate .025 .050 .050 .125 Gross Tax 375 750 750 1,875 Homestead (0) (0) (0) (0) Net Tax Due 375 750 750 1,875

19. Millage Assessed Value x Millage = Budget Request for Taxes Therefore Millage = Budget Request Assessed Value

20. Millage Example Assume Budget = $4,000,000 $4,000,000 (Budget) Millage = $100,000,000 (Assessed Value) Millage = .040 or 40 Mills

21. Reimbursement of Tax Loss Section 27-33-77 Tax Losses sustained by local governments because of exemption granted to homeowners shall be reimbursed up to amount of the actual exemption allowed, not to exceed $200.00 per qualified applicant. This reimbursement is payable in March and September

22. Contact Information Sumner Davis Center for Government & Community Development MSU Extension Service Box 9643 MS State, MS 39762 662-325-3141 sumner.davis@msstate.edu