Glossary of Terms - Property Value

Definitions are referenced from various governmental real estate sites, IAAO

The calendar year for which property tax is to be paid.

t-Statistic

A particular statistic important in inferential statistics for certain kinds of hypothesis testing of certain kinds of data.

t-Test

A particular parametric statistical test useful, among other things, in testing the level of assessment.

Tax

A compulsory charge levied by a government unit against the income or property of a person, natural or corporate, for the common benefit of all citizens. The term does not include specific charges made against particular persons or property for current or permanent benefits and privileges accruing only to those paying such charges, such as licenses, permits, and specific assessments.

Tax and Expenditure Limitations (TELs)

Statutory and constitutional limitations imposed by states on local fiscal autonomy. TELs are designed ostensibly to (1) control and reduce property taxes, (2) control the growth of government and public spending, and (3) improve fiscal accountability. The six basic types of TEL are overall property tax rate limits, specific property tax rate limits, property tax levy limits, limits on general revenue or expenditure increases, limits on assessment increases, and truth-in-taxation (full disclosure) requirements. By the beginning of 1995, forty-six states had enacted TELs.

Tax Assessed Value Model

Tax assessed value models derive an estimate of value by examining market values attributed to properties by the local taxing authorities (see Section 4.5 Tax Assessed Value Model). As a matter of local law and custom, the values reported by the taxing authorities often (but not always) vary from the current market value in some reasonably predictable manner. For example, some jurisdictions require the taxing authority to report the value at 25 percent of estimated market value. In others, values are reassessed only on an infrequent basis. Some jurisdictions report multiple values-assessed, appraised and market values. By examining local laws and customs with respect to how that value is derived, it is often possible to provide a general adjustment to values reported by taxing authorities to better approximate current market value.

Tax Base

The aggregate of the values or units to which the tax rate or rates are applied to determine the tax liability of a person or a group of persons, for example, $10,000 worth of property, $2,500 of income. Compare measure of tax; object of tax; subject of tax.

Tax Burden

Economic costs or losses resulting from the imposition of a tax. Burden can be determined only by detailed economic analysis of all economic changes resulting from the tax. In popular usage, the term often refers to the initial incidence rater than to ultimate economic costs.

Tax Calendar, Property

A calendar of the assessment year that lists important dates in the property tax system.

Tax District

(1) In general, a state or any political subdivision thereof having or exercising the power to levy taxes. (2) As applied to property taxes, any area, whether coterminous with or within a state or a political subdivision thereof, within which the tax rate levied by such state or political subdivision is required by law to be uniform on properties of the same class.

Tax Incidence

The distribution of a tax on natural persons who bear the tax after the completion of the process of tax shifting, to be distinguished in particular from the distribution of the tax on the persons, natural or legal, who pay it in the first instance.

Tax Incidence Analysis

Economic analysis that Compares the way different taxes affect the distribution of income; requires analysis of the impact of taxes on the market for the taxed item and the market for all factors (land, labor, and capital) used in producing the taxed item.

Tax Increment Bonds

Debt instruments that governments may issue to allow them to pay for projects in a reinvestment zone. Tax revenues pay off the bonds.

Tax Increment Finance (TIF)

The idea that property taxes, or other revenue, resulting from the increase in a tax base (for example, property values or retail sales) in a specific area can be used to repay the costs of investment in that area. Funds may be invested in various programs, such as public infrastructure improvements or land write-downsubsidies to private investors. See also enterprise zone.

Tax Levy

(1) The act by which a legislative body fixes either the amount of taxes to be placed in collection or the rate to be applied to a predefined tax base. (2) The amount of taxes authorized to be placed in collection by a competent legislative body.

Tax Policy Analysis

The process of gathering and interpreting economic data to provide information that can be used by policymakers to formulate tax policy.

Tax Rate

(1) The amount of tax stated in terms of a unit of the tax base, for example, 30 mills per dollar, 2 percent, 2 cents per gallon. (2) For the property tax, the percentage of assessed value at which each property is taxed in a given district. Distinguish between effective tax rate and nominal tax rate.

Tax Roll

An official list showing the amount of taxes charged against each taxpayer and/or each property within the jurisdiction of a tax district. Note: In property taxation, the tax roll is sometimes combined with the assessment roll into a single document.

Tax Rollback

A tax rollback results in assessment of back taxes on land that was previously taxed according to special-use value. When land no longer qualifies for use valuation, the taxing unit assesses taxes for a number of years as specified by statute. The additional tax is the difference between the amount of tax imposed and the amount that would have been imposed if the land had been appraised at (and taxed on the basis of) full market value.

Tax Sale

Sale of a taxpayer's property by a public authority so that delinquent taxes may be collected from the proceeds; usually preceded by a period during which the taxpayer can pay delinquent taxes, and followed by a period during which the taxpayer can redeem the property from the purchaser. See also certificate of redemption; redemption.

Tax Shifting

The act of a taxpayer in transferring a tax to another person by means of price changes. Note: A tax is said to be fully shifted when it results in price changes that maintain the taxpayer's net income at the level that would obtain in the absence of the tax. So long as price changes occur that forestall the reduction of net income by the full amount of the tax payment, some shifting has occurred. Shifting may be forward, as in the case of a tax on a retail concern that is shifted by increasing the retail price, or backward, as when such a tax is shifted by a reduction in the wages of employees or in wholesale prices.

Tax Warrant

The tax collector may ask a court to issue a document called a tax warrant directing a peace officer and tax collector to take as much of a person's personal property as is necessary to pay all taxes, penalties, and interest the person owes.

Tax, Ad Valorem

A tax levied on a base that is measured by value. Note: This term is often used to refer only to property taxes or to general property taxes, although technically it is applicable to income taxes, ad valorem tariffs, special property taxes, and so on. Contrast tax, specific.

Tax, Classified Property

An ad valorem property tax that, in contemplation of the law, is administered uniformly with respect to two or more classes of property, except that the effective tax rate differs by law for different classes of property either through the use of different tax rates or different fractional assessments. Compare tax, special property. See also classification; classified property tax system.

Tax, Degressive

A progressive tax in which the rate increases with the size of the base but by a decreasing increment. Note: Most progressive taxes are of this character in at least the higher brackets. Compare tax, progressive; tax, proportional; tax, regressive.

Tax, Differential

Synonymous with the preferred term classified property tax.

Tax, Direct

A tax that is intended to have its incidence (see tax incidence) on the person on whom it is levied; for example, a poll tax, an income tax, and usually a property tax. Contrast tax, indirect.

Tax, General Property

(1) Originally, an ad valorem property tax that, in contemplation of law, was administered uniformly with respect to all tangible and intangible property (with the exception of a few classes specifically exempt) and that involved a uniform rate throughout each tax district. (2) Currently, the remnants of such a tax after its continued curtailment through classification, exemptions, use-value assessment laws, and special property tax laws applicable to various types of personal property. Compare tax, special property; tax, classified property.

Tax, Graduated

A progressive tax in which certain brackets of wealth or income (or of whatever else constitutes the tax base) are established, with a fixed or proportional tax within each bracket.

Tax, Indirect

A tax that is intended to have its incidence on some person other than the one on whom it is levied, for example, an import duty, a sales tax. Contrast tax, direct.

Tax, Land Value

An ad valorem property tax measured by the value of land exclusive of any improvements thereon. Compare tax, single.

Tax, Net Worth

An ad valorem property tax based on the difference between the total assets and total liabilities of the taxpayer. Note: This is a tax that is used in a number of countries but not in the United States .

Tax, Progressive

(1) A tax in which the effective rate is higher for a taxpayer subject to taxation on a large tax base than for a taxpayer subject to taxation on a small tax base. (2) Loosely used to refer to any tax that absorbs a larger proportion of the wealth or income of the well-to-do classes than of the poorer classes. Contrast tax, proportional; tax, special property; tax, graduated.

Tax, Property

Any tax that is imposed on persons on account of their ownership or possession of property and is measured by the number of units, the value, or some presumptive evidence of number of units or value, of such property. Note: This tax is generally, but not necessarily, intended to be a direct, proportional ad valorem tax. Compare tax, general property; tax, special property; tax, classified property.

Tax, Proportional

A tax in which the effective tax rate is the same for all taxpayers regardless of the sizes of the tax bases on which they are subject to taxation. Contrast tax, progressive; tax, regressive.

Tax, Recording

A property tax, generally nonrecurring, paid on recording with a designated public officer or body particular types of intangible property, such property usually being specifically exempt from the general property tax or exempt by reason of such recordation. Synonymous with "recordation tax."

Tax, Regressive

(1) A tax in which the effective rate is higher for a taxpayer subject to taxation on a small tax base than for a taxpayer subject to taxation on a large tax base. (2) Loosely used to refer to any tax that absorbs a smaller proportion of the wealth or income of the well-to-do classes than of the poorer classes. Note: A tax is said to be regressive in administration, though not legally regressive, when the ratio of the actual base to the statutory base declines as the statutory base increases, in such manner as to nullify a proportional statutory rate or to make a progressive statutory rate actually regressive. The same usage is conversely applicable to the terms "progressive tax" and "proportional tax," but is less commonly associated with them. Contrast tax, progressive; tax, proportional.

Tax, Severance

A tax imposed on the privilege or act of removing or severing specified natural resources, such as minerals or timber, from a state of nature. Note: Such a tax may be measured by gross or net proceeds or by units of production, and may be in lieu of, or in addition to, a property tax on the severed or remaining natural resources. Compare tax, yield.

Tax, Single

(1) In general, any tax that is intended to serve the fiscal needs of a sovereign government and its political subdivisions without being supplemented by other tax revenues. (2) Specifically, the tax exclusively on land espoused by Henry George and his disciples.

Tax, Special

(1)   In general, an unusual, extraordinary, or unique tax. (2) Specifically, as applied to property taxes, (a) a property tax that is levied subsequent to the levying of the regular annual property tax; (b) a property tax levied for a single purpose rather than for the general purposes of government. (Not to be confused with specific tax or special property tax.)

 

Tax, Special Property

A property tax that applies to a single class of property (for example, oil and gas properties, motor vehicles) and differs substantially in one or more respects from the general property tax. Note: Such difference may be in the base of the tax (for example, it may consist of gross earnings instead of property values), in the rate, or in important administrative aspects. Compare tax, general property; tax, classified property.

Tax, Specific

(1) A tax in which the base is a physical, rather than a value unit, for example, a head tax, a gallonage tax. (2) Sometimes (for example, in Michigan ) incorrectly used to mean a special property tax. Contrast tax, ad valorem.

Tax, Transfer

The tax payable to a state (and sometimes to a locality) upon the sale of real property and the recordation of the transfer. The payment is usually proportional to the sale price and is commonly used by appraisers in the absence of more accurate information to deduce the price for which the property sold.

Tax, Value Increment

A tax on increases in value of property between two specific dates, accruing either periodically or at the time property is transferred. Note: This tax is currently found in the capital gains features of many income tax laws, but is generally thought of as a land tax on the unearned increment. See increment, unearned.

Tax, Yield

A tax based on gross income from all or specified sources accruing to the owner of a property by reason of such ownership; generally applied to forestlands in lieu of property taxes on the timber or on the land and timber. Compare tax, severance.

Tax-Exempt Property

Property entirely excluded from taxation because of its type or use. The most common examples are religious, charitable, educational, or governmental properties. This definition omits property for which the application of a partial exemption reduces net taxable value to zero.

Taxable Value

Taxable value is the appraised value minus all applicable partial exemptions. Property taxes are levied on taxable value.

Taxation, Double

In general, the subjection of the same income or source of income, or both the income and its source, to taxation by the same governmental unit, or by coordinate governmental units, twice in the same tax period. Note: The courts generally recognize the existence of double taxation when a single object is taxed by the same governmental unit, or by coordinate governmental units, twice in the same tax period. Economists further recognize double taxation when both wealth and representative intangible property are taxed; when both property and property income are taxed; and when income is taxed to a corporation and subsequently to the stockholder upon distribution as dividends. Double taxation is not necessarily undesirable or illegal; it is only when it is discriminatory that it is to be condemned.

Taxing Unit

Any political unit of a state that imposes property taxes. Counties, school districts, incorporated municipalities (cities), and special districts may be taxing units. See also tax district.

Taxpayer

(1) A person who pays a tax in the first instance, whether he or she finally bears the burden or shifts it; generally defined in law to include all persons liable for payment of a tax whether or not they actually pay it. (2) Figuratively used to mean a more or less temporary improvement that produces enough in earnings to cover taxes and perhaps some of the other carrying charges on the land. (Term should be placed in quotation marks when used in the latter sense.)

Tenancy

The act of using or occupying property, especially real property whose fee title is vested in someone other than the occupant.

Tenancy by the Entirety

A state of tenancy, recognized by some states, in which the husband and wife are considered as a single person, neither one being free to create interests in the estate without the consent of the other and the survivor acquiring the whole interest upon the death of either. Compare tenancy, joint.

Tenancy in Common

A state of tenancy involving two or more persons owning undivided possessory interests that have arisen out of separate and distinct conveyances, any one of the tenants being free to create interest in his portion of the estate and the heirs or devisees acquiring the interest of any tenant who may die. Compare tenancy, joint; tenancy by the entirety.

Tenancy in Severalty

A state of tenancy involving one person who owns a divided possessory interest.

Tenancy, Joint

A state of tenancy involving two or more persons owning undivided possessory interests which have arisen out of a single conveyance, no one of the tenants being free to create interests in the estate without the consent of the others, and the surviving tenants acquiring the interest of any tenant who may die. Compare tenancy in common; tenancy by the entirety.

Tenant

One who holds or possesses a property.

Tenement

(1) Real property and the rights to ownership, especially those of a permanent nature that relate to and pass with the land. (2) A building intended for rental residence.

Testate

The state of having died after executing a valid last will and testament.

Theodolite

A precision surveying instrument for measuring horizontal and vertical angles. The graduated circles are usually read by means of optical microscopes and are more precisely graduated than are the circles on a transit.

Three Approaches to Value

A convenient way to group the various methods of appraising a property. The cost approach encompasses several methods for estimating replacement cost new of an improvement less depreciation plus land value. The sales comparison approach estimates values by comparison with similar properties for which sales prices are known. The methods included in the income approach are based on the assumption that value equals the present worth of the rights to future income.

Tier

The area included between two township lines.

TIGER File

Topographically Integrated Geographic Encoding and Referencing data file. A location (address) file developed within the Bureau of the Census.

Time Series Analysis

A family of techniques that can be used to measure the cyclical movements, random variations, seasonal variations, and secular trends observed over a period of time.

Time Value of Money

The principle that an amount of money anticipated as income in the future is always worth less than an equal amount in hand at the present time.

Time-Adjusted Sale Price

The price at which a property sold, adjusted for the effects of price changes reflected in the market between the date of sale and the date of analysis.

Title

The union of all elements constituting proof of property ownership or the instrument that is evidence of ownership.

Title Search

An examination of public records to ensure the quality of the seller's title to a property. Preparation of an abstract of title requires a complete title search, as does preparation to foreclose on a property in a delinquent tax suit.

Tolerance

An acceptable margin of error or inaccuracy.

Topographic Map

Refers to the basic description and elevation of a piece of land.

Torrens System

A land registration system in which ownership interests in real property are established and transferred pursuant to a governmental registration and certification process rather than by, for example, deed or will.

Total Economic Life

The period of time or units of production over which the operation of an asset is economically feasible, not necessarily the same as its physical life.

Town

(1) A small incorporated or unincorporated political subdivision of a state. (2) A civil township. (3) A small urban area.

Township

An approximately thirty-six-square mile division of land used in the Federal Rectangular Survey System. Townships are bounded by two successive range lines on the east and west and two successive township lines on the north and south.

Township Line

One of a series of survey lines running due east and west at six-mile intervals on either side of a base line, used for locating parcels of land under government survey. See also base line. Contrast range line.

Township, Civil

An unincorporated political subdivision of the state, usually coterminous with a survey township or with that portion thereof that remains after the incorporation of cities and villages situated therein.

Township, Survey

The area included between two township lines and two range lines, normally containing thirty-six sections of approximately 640 acres each. Synonymous with "Congressional township" ; "geographical township."

Trademark

A name, symbol, or other sign that identifies a product or service; officially registered and legally restricted to use by the owner alone.

Transformation

The process of changing the values and definitions of one or more variables so as to make them more useful for further analysis. If market value changes with living area, for example, a valuable transformation would be to change length and width to area, and if market value does not change proportionally with area, a valuable transformation might be to use the logarithm of area.

Treasury Bills

Short-term debt obligations of the United States treasury.

Trended Original Cost

(1) The cost of constructing an improvement at a particular time, adjusted to reflect inflation and deflation, as well as changes in construction costs, between that time and the appraisal date. (2) Method of cost estimating that obtains an estimate of the reproduction cost of a structure by adjusting its original, or historical, cost with a factor from an appropriate construction cost index.

Trending

Adjusting the values of a variable for the effects of time. Usually used to refer to adjustments of assessments intended to reflect the effects of inflation and deflation and sometimes also, but not necessarily, the effects of changes in the demand for microlocational goods and services.

Trending Factor

A figure representing the increase in cost or selling price over a period of time. Trending accounts for the relative difference in the value of a dollar between two periods.

Trust, Revocable

A trust in which the grantor of the property held in trust retains the right to repossess the legal and equitable titles. See deed, trust.

 

COMODOe

One who holds legal title to property under a trust agreement. Compare settlor; beneficiary.

Truth-in-Taxation (Full Disclosure) Requirements

Legal obligations for local government officials to make taxpayers aware of assessment increases, levy increase proposals, and so on, and to give taxpayers an opportunity to participate in public hearings on the changes.

Turnover

A figure signifying a relationship between sales over a stated period (usually a year) and average inventories during such period, arrived at by dividing either (a) total cost of sales by total cost of the average inventory or (b) total sales receipts by total sale price of the average inventory.

Turnover Ratio

A valuation guideline based on sales activity, the number of times per period (usually a year) a business sells the average sale value of its inventory during the same period.

Two-tailed Test

A test in which the alternative hypothesis does not specify the direction of the relationship, as opposed to a one-tailed test, in which the direction of relationship is specified. For example, the alternative hypothesis that "a does not equal b" implies a two-tailed test, whereas "a is greater than b" implies a one-tailed test. See also null hypothesis.

The date by which the ownership of a property changes hands. Typically this is the closing date for any given home sale, or a date in which the ownership is transferred within the local county records.