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Assessed Value: Definition, How It’s Calculated, and Example

How is value assessed?

The assessed value of a house or other piece of real estate is the sum allotted to it for property tax reasons. Among other things, it considers the market value of comparable nearby homes. The assessed value is frequently determined as a proportion of the property’s fair market value.

Knowledge of Assessed Value

A home’s or other property’s assessed value is solely used to calculate the appropriate property tax, sometimes called an ad valorem tax.

The property’s general condition and quality, as well as nearby property prices, the size of the residence, its features, and market circumstances, are all considered when determining the assessed value. Numerous of these variables are collected from computerized real estate data for the neighborhood and vicinity of the property.

Assessors for local governments

A government assessor is responsible for determining and routinely updating a property’s assessed value. Typically, certain tax districts appoint government assessors. The process that may be used to determine the assessed value varies per district. But the fundamental procedure is much the same.

Assessors may need to personally visit homes regularly for assessment reasons, depending on the state and location. Reassessments, or a second property appraisal, are available to owners who desire to contest the assessed value set on their property.

If you live in a property as an owner-occupier rather than a landlord, the assessed value can be lower (this is frequently referred to as a homestead exemption). Although it does not affect the property’s market value, this might lower your property tax burden.

How Value Is Assessed Is Calculated

A property’s assessed value is determined as a proportion of its fair market value in most states and municipalities. The applied percentage rate might differ greatly from one location to another.

For owner-occupied, single-family houses, Mississippi, for instance, utilizes one of the lowest percentage rates in the country (10%) for determining assessed value. Massachusetts, on the other hand, employs a 100% very high percentage rate. Property taxes can be calculated once the assessed value has been established.

Property taxes and assessed value

Your home’s assessed value is just one of the variables considered to determine your property taxes. A common formula used by tax authorities is the one shown below, which often includes a millage rate or tax rate:

Effective Property Tax = Fair Market Value x Assessment Rate x Millage Rate.

The tax rate applied to the property’s assessed value is the millage rate. The standard unit of measurement for millage rates is $1,000, with one mill equaling $1 in tax for every $1,000 of assessed value. Therefore, if the mill rate in your jurisdiction is 20, divide that number by 1000 to get 02 for computation purposes. Apply that sum to the computation after that.

Say a property in your neighborhood is worth $30,000 on the open market. The assessment rate for the region is 50%. And 20 is the mill rate. The estimated property tax using the formula above is $3,000:

$300,000 × 0.50 × 0.02 = $3,000

Taxes on personal property

Several states levy a tax on some personal property and a real estate tax. The assessed value of the personal property also serves as the basis for this tax. Mobile homes, automobiles, motorbikes, and boats are examples of the kinds of personal property that are subject to tax. Rates can also differ significantly based on your location.

What sets the assessed value apart from the appraised value?

They both have values that are connected to your house, to start. Your local tax authority, however, determines the assessed value, which is then used to calculate your property tax. An industry expert determines the assessed value, typically utilized in the mortgage application process, to confirm that the property is worth the amount the borrower requests. Additionally, home purchasers (or sellers) may ask for an appraisal of the house they want to buy or sell.

What Justifies Assessed Value’s Importance?

It’s crucial to understand since it affects how your property tax bill is calculated. Additionally, if you’re searching for a house, knowing the assessed value might offer you a negotiating advantage if the asking price is significantly greater.

How Frequently Does the Assessed Value Alter?

That is subject to the state or territory in which the property is situated. In certain places, evaluations are updated yearly. Others could repeat it periodically. For further information, contact your town’s tax office.

The assessed value is the value the local government places on a piece of property, such as a house. The tax authority uses it to calculate how much a homeowner owes in property taxes. It is frequently determined as a percentage of the property’s fair market value.


  • The monetary value allocated to a house or other piece of property for taxation is called the assessed value.
  • Comparable house sales, location, and other criteria are taken into account.
  • Although assessed value is sometimes determined as a percentage of fair market value, fair market value is not the same as what the property could sell for.
  • In certain states, personal property, including vehicles and boats, is additionally taxed and given an assessed value.

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