a. most common
b. generally go by comparable sales in neighborhood
3. Income Capitalization
a. requires a temporal condensation of the income stream into a discounted present value.
b. Formula: Income = Principal * Return - solve for principal
IV. Proposition 13
A. Pre-Proposition 13
1. method of assessment: assessors usually only assessed when
something was bought or sold. This was not a problem when there
was no inflation.
2. Once price increases: there was a huge inequity between taxes that people with identical property paid. Also computers became common place.
B. Actual Proposition 13
a. as of 1978, rolls back assessments to 1975-6 value
b. if new construction, or if property is sold, basis of
reassessment is the sales price or building price.
c. changes from a current value method to an acquisition value.
2. adopted: as an amendment to the State Constitution, legalizing
an assessment process which has been used for years.
Deters businesses from expanding or changing location. Only speak to homeowners and residential problems.