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How is property classified?
For purposes of assessment, property is segregated into separate classifications (or classes and subclasses) according to its use. For example, State X may define classes of property for tax purposes as:
Class 1. Agriculture, grazing, livestock, notes, bonds, stocks, accounts receivable
Class 2: Residential, farm homes
Class 3: Commercial properties
Class 4: Motor vehicles
Class 5: Personal property, except motor vehicles
Class 6: Swamp and waste
In State Y, the property classes may take this look:
Class I: Residential
Subclass I: Single family and multi-family residential, cooperatives, townhouses, time-sharer developments
Subclass II: vacant residential lots
Subclass III: agricultural
Class II: Industrial
Class III: Scenic
Class IV: Public utility
Class V: Forest land
Classification of property by different types serves as a basis for varying the rate or ratios of tax. For example, parcels of equal market value may be taxed differently, such as residential at 60% of market value while industrial realty is at 90%. |
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