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Supplemental Materials |
| Prorations - Area and Cube Math - Commissions
- Real Estate Taxes Legal Descriptions - Table of Measures and Equivalents If you right click a link, you can open that link in a new window. |
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REAL ESTATE TAXES
AD Valorem Taxes - Real Estate is taxed "according to value". This is the meaning of "AD Valorem".
Tax Rate is determined by dividing TOTAL REVENUE REQUIRED in a school district into the TOTAL ASSESSED VALUE.
Tax rate is in terms of numbers of MILLS, a mill is 1/10th of a cent, which must be paid per $1.00 of assessed value.
Tax Rate may also be quoted in terms of cost per hundred or thousand dollars. (NOTE: In Oklahoma City, the millage is quoted in cost per thousand).
Taxes per |
Would be |
Assessment - Each property is given an assessed
value by the County Assessor in which the property is located.
1. Usually 10% - 25% of market value.
2. Must be reassessed periodically.
3. Owner may appeal assessment to Equalization Board.
Homestead Exemption applies to homes of owner
occupants. This:
1. Permits a $1,000.00 dollar reduction in assessed value which has the effect of lowering
the yearly taxes.
2. Protects home from creditors in the event of bankruptcy of home owner. EXCEPTION:
Homeowner is NOT protected from rights of mortgagee (lender).
3. Must be applied for between January 1 and March 15 of year following home purchase. The
exemption then applies until home is sold or owners move or a deed change as when a spouse
dies and the deed is then recorded into the name of the surviving spouse.
FORMULA - Property Value X Assessment = X Millage.
Example, A home is valued at $55,000.00, there is a 15% assessment, the millage is $98.75
and there is homestead filed on the home.
Step One |
55000 - Property Value |
| Step Two Assessed Value after Homestead Exemption. |
$8250 - Assessed Value -1000 - Homestead Exemption $7250 - Assessed Value after Homestead |
| Step Three Calculate Taxes |
$ 7250 - Assessed Value
after Homestead X .09875 715.9375 |
| Step Four Rounding the Number |
Always Round UP to the nearest Cent $ 715.94 per Year. |
Note: The millage used was in the thousands so you
need to move the decimal place to the left 3 places. With the amount of $98.75, you NEED
to put a 0 to the left of the 9 so you can move three decimal places.
When Selling new homes, it is a good idea to figure out what the taxes will be after the
home closes to avoid a BIG SURPRISE to the buyers after they get the tax
bill for the property next year. There will be a big difference from an
"unimproved lot" to an "improved lot." To do this, just
substitute the Sales Price for the Property Value.
Payment - Property taxes are paid in arrears and are due November 1 and are delinquent December 31. Exactly 50% of the tax may be paid by December 31, with the balance paid by March 31.
TAX PROBLEMS
1. A property valued at $42,000.00 is assessed at 20% of its value. The owners have applied for homestead exemption. the tax rate in their school district is $89.75 per thousand. What is the yearly tax?
2. Assessed value is $8,900.00. the tax rate is 101 mills. What is the tax?
3. The tax assessor has assessed a piece of farm land having 67 acres at $125.00 per acre. Tax rate is $7.89 per 100. What are the taxes?
4. Assessed Value is 25% of $29,000.00 on a rent home. Tax rate is 72 mills. What are the taxes?
MORTGAGE TAX must be paid by the mortgagee at the time the mortgage is filed according to the following formulas,
| Term of Loan | Tax per $100.00 of Loan |
| 5 Years or more | $0.10 |
| 4 Years, Less than 5 | $0.08 |
| 3 Years, Less than 4 | $0.06 |
| 2 Years, Less than 3 | $0.04 |
| Under 2 Years | $0.02 |
MATH - DOCUMENTARY TRANSFER TAX - Oklahoma law requires that documentary tax stamps be purchased and affixed to deeds.
RULES FOR CALCULATION:
Applies to price paid for property.
Cost of stamps is 75 cents per $500.00.
- NOTE: (There are those who might say that Doc Stamps are a dollar fifty per thousand but that is not the same thing as 75 cents per 500. Doc Stamps are sold in increments of 500, not 1000.)
FORMULA:
Round price paid up to the next $500.00 increment unless it is already at an increment of
$500.00.
Divide result of Step 1 by 500.
Multiply result of Step 2 by .75
MTG Problems
1. You sell your home for $25,000.00. There is an existing first mortgage on the property, which your buyer agrees to assume and pay in the amount of $13,000.00. What amount of Documentary stamps must you pay?
2. Mr. Brown buys one of your listings for $35,000. Mr. Green, the owner, wants to know how much documentary stamps will cost. there is an existing mortgage of $21,250 which Mr. Green will pay off at closing. Mr. Brown will get a new loan of $30,000.00 to finance his purchase. What is the amount of documentary stamps Mr. Green must buy?
3. You sell a home for $285,000 and the buyer is getting a 70% LTV mortgage for 18.5 years. What is the mortgage tax?
Tax problem answers: 1. $664.15, 2. $898.90, 3. $660.79, 4. $522
MTG problem answers: 1. $37.50, 2. $52.50, 3. $199.50.
Prorations - Area and Cube Math - Commissions
- Real Estate Taxes
Legal Descriptions - Table
of Measures and Equivalents
If you right click a link, you can open that link in a new window.
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