This document defines key terms related to real property and property taxes. It explains that real property includes land, buildings, and anything permanently attached to the land. It also defines assessment level as the percentage of a property's market value used to determine its assessed value for tax purposes. Finally, it provides an example of calculating the assessed value and annual property taxes for a residential property based on its market value and the local assessment level and tax rate.

2. is
property that includes land
and buildings, and anything
affixed to the land.
Real property only includes
those structures that are affixed
to the land, not those which can
be removed, such as
equipment.

3.  For
a business, real property would
include warehouses, factories,
offices, and other buildings
owned by the business.

4.  Whatever
is beneath the surface
of the land, like minerals, natural
gas, and oil
 Rights to the use of property
 Leasehold Improvements(since
they cannot be removed)

5. Assessment — the act or process of
determining the value of a property
 Assessment level — is the percentage
applied to the market value to
determine the taxable or assessed
value of the property.
 Assessed Value — the value placed
on taxable property by the assessor
for ad valorem tax purposes


6.  Fair
Market Value - is the highest
price a property can command if
put up for sale in an open market
The FMW and the assessment level
are important in determining the
assessed value of real estate.

7.  20
% for residential,
 50 % for commercial, industrial, and
mineral,
 40 % for agricultural,
 20 % for timber, and
 15 % for scientific, cultural, and
hospital.

8. Assessed Value
= FMW x Assessment
level

9. Ex.
Compute the assessed
value of a residential land
whose fair market value
is pegged at 2 million
pesos by the municipal
assessor.

10. Provinces
than 1%
Metro
– not more
Manila – not
more than 2%

11. Basic Real Estate Tax
= Assessed value x
Tax rate

12. The land is located in Cebu.
(tax rate: 1%)
AT = AV x TR
= Php 400,000 x .01
= Php 4,000