Government municipality assessors use assessed value to determine how much you should pay in property taxes. Each year, a representative from the government will conduct assessment valuations.
The factors taken into account generally include:
– property values
– the overall quality and size (square footage) of the property
– market conditions (how much similar properties sold for recently)
– home features and the value of any recent improvements
– income you are making from the property (such as renting out a room)
Is Assessed Value the Same as Fair Market Value?
No, they aren’t. The former is the value which is used as a basis for computing your property taxes. Plus, the assessment is conducted by a government representative.
The latter is the estimated amount that a piece of real estate can bring in an open market transaction. In other words, it is the determined price in a transaction between a willing buyer and willing seller. It is assessed by a trained real estate agent.
However, your property’s fair market value is actually used in the computation for determining its assessed value.
In order to compute the fair market value, qualified agents take these factors into consideration:
– the location (is it in a good neighborhood, near schools and hospitals, etc?)
– the internal (energy efficiency, number and size of rooms, appliances, heating and cooling systems, etc.) and external (curb appeal, home style, property size, nearby public utilities, etc.) characteristics
– the number of sellers and buyers in your area (supply and demand)
– comparables (how much similar homes nearby have sold for recently)
How Is Assessed Value Computed?
This is determined by first identifying the fair market value of your property. Once you have that, the next step is to find out what your state’s assessment rate is. This is the set percentage in your tax jurisdiction and it usually runs from 80%-90% of the market value. Take note though that the figures vary in each region.
Let’s say your home’s market value is $300,000 and the uniform percentage in your area is 80 percent. So, your property’s assessed value is $240,000, and your property tax is usually one to two percent of that, depending on where you live.