National Real Estate Practice Exam

What are taxes levied on a property owner for improvements benefitting only that property called?

1. Fees

2. General Property Taxes

3. Special Excise Taxes

4. Special Assessments

The correct answer is: Special Assessments

The term used to describe taxes levied on a property owner for improvements that solely benefit that property is "Special Assessments." These assessments are typically imposed by local governmental entities to finance public projects, such as sidewalks, street lighting, or sewer systems, that enhance the value or usability of the particular property. When a property receives these specific enhancements, the governing body charges the property owner a fee based on the value that the improvements bring to their property. In contrast, general property taxes are calculated based on the overall value of the property and do not directly correlate with specific improvements. Fees generally relate to services or permits and may not be specific to property enhancements. Special excise taxes are typically levied on specific goods, activities, or transactions rather than improvements made to real estate. Therefore, the correct classification for taxes related specifically to improvements benefiting a single property is indeed Special Assessments.