PSI Virginia Real Estate Practice Exam

What characterizes a special assessment tax?

1. It is a permanent increase to property taxes

2. It funds specific projects and is temporary

3. It is applied only to commercial properties

4. It is waived for low-income homeowners

The correct answer is: It funds specific projects and is temporary

A special assessment tax is characterized by its purpose and duration. Such a tax is levied to fund specific public projects that benefit particular properties, such as road improvements, sidewalk construction, or water system upgrades. Unlike regular property taxes, which are permanent and based on a property's assessed value, special assessments are typically temporary and only apply for the duration necessary to finance the specific project in question. The nature of a special assessment tax means that it targets improvements that enhance property values or provide direct benefits to the properties in the area, rather than being a blanket increase to property taxes applicable to all property owners. This targeted funding mechanism is important for municipalities as it allows them to undertake necessary infrastructure improvements without imposing a permanent tax burden on the residents.