Property Valuation
Indiana's real property assessment for agricultural land uses which valuation basis?
AMarket value based on recent farm sales
BCapitalized agricultural income approach based on productivity✓ Correct
CReplacement cost of all farm structures
DThe owner's original purchase price
Explanation
Indiana assesses agricultural land based on a capitalized agricultural income approach — using the land's productive capacity and agricultural income potential rather than pure market value. This typically results in lower assessments than market value.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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