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The developer's new office building is expected to have a market value upon completion of $3,860,000. Using the same <br />procedure employed above to calculate tax capacity, the annual taxes due on the new property will be $168,662. <br /> <br />Calculation of Tax Capacity and Taxes <br /> <br />Assessor's Estimated Market Value of New Project (Land and I~uilding): <br /> <br />$3,860,000 <br /> <br />To calculate Tax Capacity, apply Class Rates to Market Value: <br />Market Value subject to 3.4 percent rate: $3,860,000 less $1§0,000 = $3,710,000 <br />;>.4 percent Portion of Tax Capacity(First $150,000): $150,000 x ;>.4 percent = $3,600 <br />3.4 percent Portion of Tax Capacity (Over $150,000: $3,710,000 x 3.4 percent = $1;>6,140 <br />Total Tax Capacity: $3,600 plus $126,140 :$129,740 <br /> <br />To calculate Taxes paid, apply Tax Rates to Tax Capacity: <br />Sample Tax Rate for Taxes Payable in ;>001: <br />Total Taxes Paid: <br /> <br />1.3000 (can also be shown as 130.00%) <br />$129,740 * 1.3000: $168,662 <br /> <br />Calculation of Estimated Tax Increment <br /> <br />Future Annual Taxes $168,662 <br />Original Annual Taxes - 780 <br />Annual Tax Increment: $167,882 <br /> <br />Upon completion, the $780 will be kno~vn as the original taxes (under state law, the method of calculation is based upon <br />the original tax capacity rather than original taxes - one of many complications in the specifics of TIF). The taxes <br />derived from the original taxes will continue to be paid to the school district, county, city, and other taxing jurisdictions <br />throughout the life of the TIF district. The tax increment estimated at $167,882 per year can be used for various project <br />costs allowed under the law. Over the next 11 years, the tax increment cashflow would look like this: <br /> <br />Year of District Annual Tax Increment <br />2000 (Pro'ect is built) 0 <br />...~.!..(P~s~.!~.~ ................................................................................................................................... ~ ..... <br /> ................................................................................................................ ..... <br />...~P~ ........................................................................................................................................................... ~.51,~ ..... <br />...~P~5 .......................................................................................................................................................... !.SZ~ ..... <br />...~P~ ........................................................................................................................................................... ~.~!~ ..... <br />...~P~ .......................................................................................................................................................... J. SZ~ ..... <br />...~P~Z .......................................................................................................................................................... !.~!,~ ..... <br />...~PP~ .......................................................................................................................................................... !.~Z,~ ..... <br />...~P~ .......................................................................................................................................................... !.SZ:~ ..... <br />2010 167~882 <br /> <br />Total Tax Increment 1,510,938 <br />Total Present Value of Increment (@ 8.5%) 872,629 <br /> <br />Ehters and Associates - How to Calculate TIF <br /> <br /> <br />