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Simple English definitions for legal terms
clear annual value
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A quick definition of clear annual value:
A clear annual value is the amount of money that a property earns in a year after all expenses, like taxes and mortgage payments, have been paid. It is important to know the clear annual value of a property when buying or selling it.
A more thorough explanation:
Clear annual value refers to the net yearly income that can be earned from a piece of property after all expenses, such as taxes and mortgage interest, have been paid. For example, if a rental property generates $50,000 in rent each year, but $10,000 is paid in taxes and $5,000 in mortgage interest, the clear annual value would be $35,000.
This value is important for property owners and investors as it helps them determine the profitability of a property. It can also be used by insurance companies to calculate the amount of coverage needed for a property.
For instance, if a property has a clear annual value of $35,000, an insurance policy may be written to cover that amount in case of damage or loss.