What is an Assessed Value?

Published by Thomas Herold in Economics, Laws & Regulations, Real Estate

'Assessed Value' is explained in detail and with examples in the Real Estate edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Assessed Value refers to the specific dollar value amount which a municipality assigns to a certain property. They do this for the purpose of determining the relevant taxes for the property and owner. These assessed valuations actually create a given residence’s tax purpose value. They do this through considering inspections and any comparable home sales in the area. Once this is all completed, the municipal government will set a value on the home and then assess the due property taxes. The owner then receives the final bill for municipal taxes on the property. The assessment value is also called the ad valorem tax.

Most of the time, such Assessed Value proves to be less than the associated fair market value or appraisal value for the property in question. This assessment value is a number with very limited uses. It only applies to the relevant property tax in question.

The person who has the role for determining the Assessed Value turns out to be a government assessor. These individuals are typically assigned by particular taxing districts. It is true that every taxing jurisdiction maintains its own rules and procedures for determining the actual assessment value. Despite this, the general standards which they rely on are nearly identical.

The assessors are expected to make these valuations on a yearly basis. This is where the property tax bill comes from every year. Most years, the assessment value will not change. The Assessed Value is derived from the fair market value, of which they set a certain percentage. They consider a number of different elements in determining this. Chief among these are comparable property values, condition of the property, features of the house, total square footage and air conditioned square footage, and conditions in the market. A great number of such calculations prove to be derived from the computer models. These come from official real estate databases on regions and neighborhoods.

Besides such computer-based real estate data, the government assessors will do physical assessments onsite when necessary. Some states have exacting and specific requirements for the ways in which their government assessors have to visit the various properties which are being assessed in person. There are also rules regarding property owner objections to a set value. They can dispute the value on their given house and can ask for a reassessment visit. This is carried out in practice as a property second evaluation.

In the majority of states, the final numbers which the jurisdictions come up with represent a certain percentage of the fair market value for a given property. This assessed value ratio can range significantly from one state to another. It could in theory be as wide a variance as from 10 percent to 100 percent of the fair market value of the property in question. At only ten percent assessed value ratio, Mississippi boasts among the lowest ones in the United States. Coming in at a staggering 100 percent assessed value ratio is Massachusetts in the typically tax-heavy Northeast and New England regions.

Most states utilize a set property tax formula when determining their so-called millage rate. Millage rate refers to the actual tax rate compiled for the assessed value. This is the value times millage rate times assessment ratio equals the effective property tax. They are commonly described per $1,000. A single mill equates to $1 of tax for each $1,000.

The majority of the states also require a personal property tax to be levied. This comes from the assessed value of other forms of property. Personal property that has tax assessed on it includes cars, mobile homes, boats, and motorcycles.

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The term 'Assessed Value' is included in the Real Estate edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.