LIMITED VALUE CALCULATION 

Explanation

  1. The preceding charts illustrates that the new "25%" rule to be used in 1983 and after. It is applicable only to "Rule A" situations. That is, it is an alternate method of calculating "Rule A" Limited Values which must be used if the result is greater than that produced by the familiar "last year plus 10%" method. Similarly, it may not be used if the result is less than the "last year plus 10%" method. "Rule B" situations are to be handled in the same manner as in previous years.

    2.  

  2. In order to determine whether a given property should have a Rule A Limited Value calculated using the "last year plus 10%" method or the "25% of the difference method", you can use either of the following techniques: 

 

  1. Calculate the Limited Value using each method and use the greater result. 

    2.  

  2. Divide the current Full Cash Value by the previous year's Limited Value. If the result is less than 1.40, use the "last year plus 10%" method. If the result is greater than 1.40, use the "25% of the difference" method. If the result is exactly 1.40, use either method. 

Example #1

$150,000 Current FCV

$125,000 Previous Year's Limited = 1.20 (less than 1.40)

Therefore, the current Limited Value will be: $125,000 x 1.10 = $137,500 

Example #2

$200,000 Current FCV

$125,000 Previous Year's Limited = 1.60 (greater than 1.40)

Therefore, the current Limited Value will be:

$200,000

-$ 125,000

$75,000 x .25 = $18,750

+125,000

$143,750

 

3.Remember that in no case may the current Limited Value exceed the current Full Cash Value, so you need not be concerned with this restriction when using either of these methods. However, a "previous year plus 10%" Rule A calculation may exceed the current Full Cash Value. In such cases, the result must be reduced to the same level as the Full Cash Value.

 

 

 

Text Box: Limited Value equals the previous year’s Limited Value, +10% Text Box: Use whichever of these results is greater, not to exceed the Current Full Cash Value. Text Box: Limited Value equals the previous year’s Limited Value plus 25% of the difference between the previous year’s Limited Value and the Current Full      Cash Value Text Box: Limited Value is determined by Multiplying the Current Full Cash by a class/market area factor reflecting the average relationship of Full Cash and Limited Values assigned to similar property. The result may not exceed the Current Full Cash Value. Text Box: Rule B Text Box: Property has changed since previous year (split, new construction, Off-site improvements, etc.) Text Box: Rule A Text Box: Property has not changed  since previous year Text Box: Limited Value