The Accelerated Cost Recovery System (ACRS) is a method of depreciation that spreads the deduction of a property’s cost over specific periods. Originating from the Economic Recovery Tax Act of 1981 and later modified, ACRS was devised to provide significant tax incentives.
An Agricultural Use Exemption is a classification for ad valorem tax purposes applied to land utilized for agricultural activities or as open space. This exemption reduces property tax liability provided the land remains in an undeveloped state.
An Assessment Roll is a public record of the assessed value of property within a taxing jurisdiction. It is certified for completeness and accuracy by the tax assessor annually.
Carryover basis is the tax terminology used in tax-deferred exchanges to describe the transfer of the adjusted tax basis from a relinquished property to the newly acquired property. This concept is significant in deferring capital gains tax until the final sale of the property.
A method of dividing real estate improvements into various parts such as the roof, plumbing, electrical system, and shell, and then depreciating each component separately for tax purposes.
Depreciation recapture refers to the process of collecting income tax on gains made through the sale of depreciable property, where deductions for accelerated depreciation exceed via recapture in accordance with Section 1250 of the Internal Revenue Code.
The effective tax rate is a measure used to compare the tax payments with the market value of the property or annual income, facilitating comparisons across different jurisdictions with varying assessment ratios.
Excess accelerated depreciation refers to the accumulated difference between accelerated depreciation claimed for tax purposes and what straight-line depreciation would have been. It's typically recaptured as ordinary income upon sale instead of receiving more favorable capital gains treatment.
A Special Assessment District is an area where a special assessment is imposed on property owners to fund public projects that provide specific benefits to the residents within the defined area.
Tax equalization ensures that taxpayers within the same jurisdiction pay similar amounts for equivalent properties, contributing to a fairer property tax system.
