Real estate exam terms
5 terms, each with a plain definition, the term it is most often confused with, and how the license exam actually asks about it.
A tax levied according to value
Latin for "according to value", and the basis of general real estate taxes: the more a property is assessed at, the more tax it bears. The resulting lien takes priority over essentially all private liens regardless of when they were recorded.
That priority rule is the connection between the tax vocabulary and the lien vocabulary, and items cross between them.
The value a taxing authority assigns to a property for tax purposes
Often a fraction of market value, set by applying a local assessment ratio. It exists to allocate the tax burden between properties, not to estimate what one would sell for.
Treating assessed value as an opinion of market value is a mistake in both directions, and it appears in pricing questions as well as tax ones.
The percentage of market value at which property is assessed
Applied to market value to produce assessed value. It is set locally and varies widely, and some jurisdictions assess different classes of property at different ratios.
A tax calculation with an assessment ratio in it is testing whether you apply the rate to assessed value rather than to market value. That is the whole reason the ratio is in the question.
A tax rate expressed in thousandths: one mill is $1 per $1,000 of assessed value
A rate of 25 mills is 0.025 as a decimal, or $25 per $1,000 of assessed value. Converting the mill figure to a decimal before multiplying is the reliable habit.
A full item runs market value → assessment ratio → assessed value → mill rate → annual tax, and skipping the ratio step is the mistake the question is built to catch.
A charge on benefited properties for a specific public improvement
Levied on the properties that gain from a new pavement, sewer line or street lighting, usually in proportion to frontage or area rather than to value. It creates a specific, involuntary lien and is generally payable over a number of years.
Contrast with the general ad valorem tax: special assessments are specific, limited in time, and tied to an improvement rather than to a budget.
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