What is an arm's-length, bona fide sale?

A non-fraudulent, non-deceitful, good faith transaction between unrelated or unaffiliated parties acting in their own interests.

How is Fair Market Value defined for Georgia property taxation?

What a knowledgeable buyer would pay, and a willer seller would accept in an arm's length bona fide sale

What is Georgia's general assessment ratio for taxable tangible property?

40% of the Fair Market Value

At what percentage of the ordinary assessment level is a qualifying bona fide agricultural property assessed?

75% of the level at which all other tangible real property is assessed. 75% of 40% = 30%

At what percentage of current use value is eligible conservation use property assessed?

40% of its current use value.

How does a qualifying most recent arm's-length real estate sale limit Fair Market Value for the next taxable year?

It does not, it used to cap the FMV but that is no longer in effect.

Which Georgia county body establishes the assessment for each parcel?

The county Board of Tax Assessors

Who determines the county millage rates after adoption of the budget?

County commissioners set county millage

Which county official prepares property tax bills and collects property taxes?

The Tax Commissioner compiles the digest, applies millage, sends bills, and collects tax.

What does one mill mean?

$1 per $1,000 of taxable assessed value, or 0.001

How do you calculate property tax from net assessed value and millage rate?

Net assessed value x millage as a decimal; $100,000 x 25 mills (0.025) = $2,500.

How often should every real property parcel be physically reviewed under the manual?

At least once every three years.

What must a real property mapping system identify?

Streets/roads, parcel lines, unique parcel identifiers, and parcel dimensions or acreage estimates.

Which sales and property characteristic records should county appraisal staff maintain?

Available county sales, property characteristics, land/locations and improvement characteristics sufficient to classify and value property.

Which homesites and dwellings are included in the residential property classification?

A single-family homesite and associated improvements; the manual includes duplexes and triplexes.

How is a multifamily dwelling with four or more units classified?

Commercial

How does the board determine the breakpoint between small and large land tracts?

At a pronounced market price-per-acre change; if unclear, the board sets a reasonable breakpoint between 5 to 25 acres.

What do the first and second characters of a Georgia tax digest property code represent?

First character gives property class; second gives real or personal property stratum.

What property class and stratum does Georgia digest code R3 represent?

Residential class, Lots stratum

What property class and personal property stratum does Georgia digest code CF represent?

Commercial class, Furniture/Fixtures/Machinery/Equipment personal property stratum.

Under what circumstances may a board-approved final real-property assessment be amended?

After the board-approved annual notice, only for a clerical error or another unlawful basis.

What is mass appraisal?

Systematic appraisal of groups of properties as of a date using standardized procedures and statistical testing.

What are the three approaches to value?

Market (sales comparison), Cost, and Income

What is the first and most important step in the appraisal process?

Define the problem.

Why should an appraiser reconcile approach indications instead of simply averaging them?

Each indication receives weight based on its relevance and reliability for the subject and available evidence. An appraiser NEVER averages them.

What do the letters P.E.G.S. stand for as forces affecting real estate value?

Physical, Economical, Governmental, and Social

What is the appraisal principle of substitution?

A buyer will not pay more than the cost of an equally desirable substitute.

What is the appraisal principle of contribution?

A component's value depends on what it adds to the whole property.

What is the appraisal principle of anticipation?

Value reflects future benefits.

What is the appraisal principle of conformity?

Similar and compatible property uses and characteristics tend to support value.

What is the appraisal principle of consistent use?

Land and improvements in transition should not be valued using inconsistent uses.

What is the first activity in the mass appraisal/assessment flow?

Property identification and mapping.

After identifying property, what stages follow in the mass appraisal assessment flow?

Data collection and analysis, valuation, assessment notice, and appeal procedures.

What is reproduction cost new?

Current cost of an exact duplicate with the same materials, designs, and deficiencies.

What is replacement cost new?

Current cost of equivalent utility using modern materials and design.

In the cost approach, what is the distinction between grade/class and physical condition?

Grade/Class describes quality of materials, workmanship, and design; condition describes physical states.

What four methods can estimate the cost new of improvements?

Quantity Survey, Unit in Place, Square/Cubic Foot, and factored historical cost.

What are the three categories of accrued depreciation in the cost approach?

Physical, Functional, Economical

How do functional and economic obsolescence differ in the cost approach?

Function problems arise from design or features within the property; economic obsolescence arises from outside forces.

When is an item of depreciation considered curable?

The added value offsets the cost of repair.

Does land depreciate in the cost approach?

No, land does not depreciate, it depletes.

What is the income approach?

Convert the property's income-producing ability into an indicated present value.

How do you calculate a gross income or gross rent multiplier from a comparable sale?

Comparable sale price/Corresponding gross income for the same period

How do you use a gross income/rent multiplier to estimate the subject property's

Subject gross income x supported multiplier, matching monthly with monthly or annual with annual.

Which gross income period is commonly used for a residential GRM and for a commercial CIM?

Monthly for residential, and annual for commercial

What is potential gross income (PGI)?

Expected annual gross income at full rental occupancy

How is effective gross income (EGI) calculated from potential gross income?

PGI less vacancy and collection loss

How is net operating income (NOI) calculated from effective gross income?

EGI less supported operating expenses

What formulas relate income (I), capitalization rate (R), and value (V)?

I = R x V R = I/V V = I/R

Which three components form a composite income capitalization rate?

Effective tax rate (millage decimal x 0.40) + Interest rate + recapture rate (1/Remaining economic life)

How is an individual assessment to sales ratio calculated?

Assessed value/Verified sale price

After verifying a bona fide sale, what might a low assessment to sale ration indicate?

The appraisal may be below market and require review.

How do you find the median assessment to sale ratio?

The middle ratio after sorting, or average of the two middle ratios for an even sample.

How do you find the mean assessment to sale ratio?

Sum of individual ratios/number of ratios

How do you find the aggregate assessment to sale ratio?

Total assessed values/total sales prices

In a sales ratio study, what is a sale ratio's absolute deviation from the median?

Absolute difference between an individual ratio and the median ratio.

How is mean absolute deviation calculated in a sales ratio study?

Sum of absolute deviations/number of sales

What is the formula for Coefficient of Dispersion (COD), and what does it measure?

Mean deviation/median ratio; it measures uniformity

What COD thresholds apply to residential and nonresidential property in Georgia?

less than or equal to 15% for residential and less than or equal to 20% for nonresidential.

What is the formula for Price Related Differential (PRD), and what does it measure?

Mean ratio/aggregate ratio; it measures assessment bias

What price related assessment pattern does a PRD above 1.00 indicate?

Regressivity: higher priced properties tend to have lower assessment ratios

What price related assessment pattern does a PRD below 1.00 indicate?

Progressivity: lower priced properties tend to have lower assessment ratios

What PRD compliance range is stated for Georgia assessment ratio studies?

0.95 - 1.10

What assessment-level range is discussed for the central tendency measure of homogeneous property class?

A central tendency measure between 36% and 44% (0.36 - 0.44)

Why can the mean sales ratio alone conceal inequity among assessments?

Averages alone do not show ratio spread; COD adds a uniformity measure

Why is the median sales ratio less sensitive to extreme ratios than the mean?

It depends on ordered middle observations, not the magnitude of extreme ratios.

Which eight measures are calculated in a sales ratio study?

Ratios, Median, Absolute Deviations, Mean, Aggregate, Mean Deviation, COD, and PRD.