Assessed Value - Explained
What is Assessed Value?
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Table of ContentsWhat is Assessed Value?How Does Assessed Value Work?Property TaxReal Estate Data Fair Market Value
What is Assessed Value?
An assesses value refers to the monetary worth or dollar value of an asset or property owned by individuals. This value determines the worth of a property for tax purposes. The assessed value of properties could also mean the value assigned to individual properties by the local government or municipal for tax purposes. Certain factors are put into consideration when determining the assesses value of properties such as a home sale. Generally, the appraised or fair market value of properties is higher than the assessed value of properties.
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How Does Assessed Value Work?
In real estate, the assessed value of a property determines the amount of property tax a property owner will pay to the local government or municipality. The assessed value is not the same as the market value or current value of a property, usually, the assessed value is lower than the fair market value. Assessed value measures ad valorem tax, this value is assigned by district governments to personal properties. The tax assessor of each region or municipality has different ways of calculating the assessed value of personal properties although there are primary standards guiding the calculation.
Homeowners or individuals that own assets in cities, municipalities, or regions are required to pay property tax on the asset owned. The property tax that is payable on a property is determined by the assessed value of the property which is allocated by assessors. Real estate data is a crucial metric when generating the assessed values of properties, this value is often calculated through computerized techniques. There are certain factors that assessors consider when determining the assessed value of a property, these are;
- The quality of the property
- Fair market value
- The condition of the property and other features.
Real Estate Data
Every city, province, municipality or region has real estate data which comprises information about all properties located in the area. It is the duty of the citys tax assessor to generate assessed values using the real estate data of a province. Different states have different requirements for assessed value, most times, assessors are required to physically assess properties and not just depend on online data when determining assessed value. This value is applicable to pieces of land and every personal property within the city or province. In some cases, disputes arise between property owners and assessors on the assessed value of properties. In this situation, reassessment can be requested by the property owner.
Fair Market Value
The assessed value of a property is a percentage of the fair market value of the property. This percentage varies and it could be between 10 to 100% of the fair market value. The assessment ratio used in different cities also varies, in Massachusetts for instance, a 100% assessment ratio is used. Generally, states use the formula below when calculating property tax; Value x Assessment Ratio x Millage Rate = Effective Property Tax