AD VALOREM TAX FOR MML UPDATED JULY 2017

AD VALOREM TAX IN MISSISSIPPI Presented by Joe Young Stennis Ins3tute of Government DEFINE “AD VALOREM” •  The phrase ad valorem is La3n for “according to value” ROLE OF GOVERNING AUTHORITY §§ 27-39-307 and 21-33-45 of the Mississippi Code of 1972 They shall have the power to levy such taxes as may be necessary to meet the demands of their respec3ve municipality not exceeding the limits that may be prescribed by law AD VALOREM TAX SPENDING WHAT IS TAXED? • 10% - Class I – Single Family Owner Occupied ResidenFal • 15% - Class II All Real Property not classied Class I ã15% - Class III Business Personal Property ã30% - Class IV Public UFliFes ã30% - Class V Motor Vehicles WHAT IS TRUE VALUE? True value is dened in Đ 27-35-50 of the Code: True value shall mean and include, but shall not be limited to, market value, cash value, actual cash value, property value and value for the purposes of appraisal for ad valorem taxa3on In arriving at the true value of all Class I and Class II property and improvements, the appraisal shall be made according to current use, regardless of loca1on In arriving at the true value of any land used for agricultural purposes, the appraisal shall be made according to its use on January of each year, regardless of its loca3on; in making the appraisal, the assessor shall use soil types, produc3vity and other criteria WHAT IS TRUE VALUE? (cont.) •  The point here is that true value and market value are not the same Agricultural values, for example, can be much less than the actual market value of the property •  Ownership and assessment of real property is as of January 1st of the tax year and payable the next year •  Example: Taxable: January 1, 2016 Payable: December 26, 2016 February 1, 2017 WHAT IS ASSESSED VALUE? •  The true value is mul3plied by a ra3o that is set by state law to yield the assessed value The ra3os are as follows: Class I Class II Class III Class IV Class V 10% 15% 15% 30% 30% WHAT IS ASSESSED VALUE? (con’t) •  It is necessary to understand the difference in market value, true value, and assessed value Assessed value is used to determine everything from millage rates to salary levels for some county officials, including that of supervisors HOW ARE THE DIFFERENT CLASSES TAXED? •  Basic Formula !  True Value x % (Ra3o set by law) Assessed Value x Millage Rate Gross Taxes Assessed Value x Millage= Budget Therefore: Millage= Budget / Assessed Value Assume Budget = $4,000,000 $4,000,000 (BUDGET) Millage = $137,254,440 (ASSESSED VALUE) Millage = 0291 or 29.1 Mills Special Homestead Exemp3on Homestead exemp3on for ci3es involves only those applicants that qualify for "Special Homestead Exemp3on" That is the applicants must be over 65 years of age or disabled The applicants are tax exempt on $7,500 of "assessed value" The State of Mississippi reimburses the city a flat $200 per applicant In recent years the state has not reimbursed the ci=es all of the $200 because of budget cuts REGULAR HOMESTEAD $7,500 TABLE ASSESSED VALUE OF HOMESTEAD $ $ 151 $ 301 $ 451 $ 601 $ 751 $ 901 $1,051 $1,201 $1,351 $1,501 $1,651 $1,801 $1,951 $2,101 $2,251 $2,401 $2,551 $2,701 $2,851 $3,001 $3,151 $3,301 $3,451 $3,601 $ 150 $ 300 $ 450 $ 600 $ 750 $ 900 $ 1,050 $ 1,200 $ 1,350 $ 1,500 $ 1,650 $ 1,800 $ 1,950 $ 2,100 $ 2,250 $ 2,400 $ 2,550 $ 2,700 $ 2,850 $ 3,000 $ 3,150 $ 3,300 $ 3,450 $ 3,600 $ 3,750 ASSESSED VALUE CREDIT AMOUNT $ 6.00 $ 12.00 $ 18.00 $ 24.00 $ 30.00 $ 36.00 $ 42.00 $ 48.00 $ 54.00 $ 60.00 $ 66.00 $ 72.00 $ 78.00 $ 84.00 $ 90.00 $ 96.00 $ 102.00 $ 108.00 $ 114.00 $ 120.00 $ 126.00 $ 132.00 $ 138.00 $ 144.00 $ 150.00 OF HOMESTEAD $ 3,751 $ 3,901 $ 4,051 $ 4,201 $ 4,351 $ 4,501 $ 4,651 $ 4,801 $ 4,951 $ 5,101 $ 5,251 $ 5,401 $ 5,551 $ 5,701 $ 5,851 $ 6,001 $ 6,151 $ 6,301 $ 6,451 $ 6,601 $ 6,751 $ 6,901 $ 7,051 $ 7,201 $ 7,351 $ 3,900 $ 4,050 $ 4,200 $ 4,350 $ 4,500 $ 4,650 $ 4,800 $ 4,950 $ 5,100 $ 5,250 $ 5,400 $ 5,550 $ 5,700 $ 5,850 $ 6,000 $ 6,150 $ 6,300 $ 6,450 $ 6,600 $ 6,750 $ 6,900 $ 7,050 $ 7,200 $ 7,350 $ 7,500 CREDIT AMOUNT $ 156.00 $ 162.00 $ 168.00 $ 174.00 $ 180.00 $ 186.00 $ 192.00 $ 198.00 $ 204.00 $ 210.00 $ 216.00 $ 222.00 $ 228.00 $ 234.00 $ 240.00 $ 246.00 $ 252.00 $ 258.00 $ 264.00 $ 270.00 $ 276.00 $ 282.00 $ 288.00 $ 294.00 $ 300.00 Example 1 ALL CLASS I RESIDENTS WITH REGULAR HOMESTEAD EXEMPTION COUNTY MILLS 59.48 CITY MILLS 34.37 SCHOOL MILLS 48.29 TOTAL MILLS 142.14 $ 100,000 X TRUE VALUE 10% ASSESSMENT RATIO _ $ 10,000 ASSESSED VALUE $ 10,000 ASSESSED VALUE X 0.14214 _ $ 1,421.40 GROSS TAX $ 1,421.40 GROSS TAX - $ 300.00 $ 1,121.40 REGULAR HOMESTEAD CREDIT NET TAX DUE Example 2 ALL CLASS I RESIDENTS WITH SPECIAL HOMESTEAD EXEMPTION COUNTY MILLS CITY MILLS SCHOOL MILLS TOTAL MILLS 59.48 34.37 48.29 142.14 $ 100,000 X 10% $ 10,000 - 7500 $ 2,500 X 0.14214 $ 355.35 TRUE VALUE ASSESSMENT RATIO ASSESSED VALUE SPECIAL HOMESTEAD CREDIT NET ASSESSED VALUE NET TAX DUE Example 3 ALL CLASS II RESIDENTS WITH NO HOMESTEAD EXEMPTION COUNTY MILLS 59.48 CITY MILLS 34.37 SCHOOL MILLS 48.29 TOTAL MILLS 142.14 $ 100,000 X 15% $ 15,000 TRUE VALUE ASSESSMENT RATIO $ 15,000 X 0.14214 $ 2,132.10 ASSESSED VALUE ASSESSED VALUE GROSS TAX What is a Tax Exemp3on? Assume Budget = $4,000,000 Millage = Millage = 0291 or 29.1 Mills $4,000,000 (BUDGET) $137,254,440 (ASSESSED VALUE) Assume Budget = $4,000,000 $4,000,000 (BUDGET) Millage = -$100,000,000 (ASSESSED VALUE) Millage = 040 or 40 Mills AVERAGE MILLAGE RATES IN MS RURAL RESIDENT CITY RESIDENT COUNTY LEVIES 66.73 56.66 K-12 SCHOOL LEVIES 51.91 51.91 3.47 3.47 COMMUNITY COLLEGE LEVIES MUNICIPAL LEVIES TOTAL MILL RATE 37.03 122.11 DISCLAIMER: The informa3on provided above is a compila3on of data from numerous outside sources As such, this data can data can only be warranted to the extent of the correctness of its source documents MS DEPT OF REV 149.07 • BREAKDOWN OF THE AD VALOREM TAX BURDEN •  NOTE: ALL DATA WAS OBTAINED FROM THE DOR ANNUAL REPORT AND IS ASSUMED TO BE ACCURATE TOTAL STATEWIDE ASSESSED VALUE IN 2016 FY 2016 TOTAL ASSESSED VALUE CLASS I (SINGLE FAMILY OWNER OCCUPIED RESIDENTIAL REAL PROPERTY) $ 7,086,778,972 % OF TAX BURDEN 24% CLASS II (ALL REAL PROPERTY NOT CLASS I) $ 10,107,581,271 CLASS III (BUSINESS PERSONAL PROPERTY INCLUDING MOBILE HOMES) $ 5,372,717,849 34% CLASS IV (PUBLIC UTILITY PROPERTY) $ 3,162,634,317 11% CLASS V (MOTOR VEHICLES) $ 3,776,810,715 13% TOTAL $ 29,506,523,124 100% DATA PROVIDED BY JEFF FORMAN (MS DEPT OF REVENUE) 18% For more informa3on Joe Young young@sig.msstate.edu Cell - 601.248.7809 ... value and value for the purposes of appraisal for ad valorem taxa3on In arriving at the true value of all Class I and Class II property and improvements, the appraisal shall be made according to current use, regardless of loca1on... They shall have the power to levy such taxes as may be necessary to meet the demands of their respec3ve municipality not exceeding the limits that may be prescribed by law AD VALOREM TAX SPENDING WHAT IS TAXED? • 10% -...DEFINE AD VALOREM ã The phrase ad valorem is La3n for according to value ROLE OF GOVERNING AUTHORITY ĐĐ 27-39-307 and 21-33-45 of the