What Is Tax Assessed Value?

The tax assessed value is the value your local government assigns to your property for the purpose of calculating property taxes. This valuation is determined by the municipality or county and is often based on a percentage of your property’s fair market value. Factors such as property size, location, and improvements may influence the assessed value, but it typically:

• Is lower than the market value.

• Reflects the government’s estimate of your property’s worth.

• Directly impacts the amount of property tax you’ll owe annually.

For example, if your property’s assessed value is $200,000 and your local tax rate is 1.5%, you would owe $3,000 in property taxes for the year.

What Is Market Value?

The market value represents the price a buyer is willing to pay for your home in the current real estate market. This value is determined by:

• Recent sales of similar properties in your area.

• Current market conditions (e.g., demand and supply).

• The property’s features, location, and overall appeal.

Unlike the tax assessed value, the market value fluctuates frequently and can be influenced by broader economic trends, neighborhood desirability, and buyer interest.

Why Understanding the Difference Matters

Knowing the distinction between these two values is crucial, whether you’re a homeowner, buyer, or seller. Here’s why:

• For Homeowners: Understanding your tax assessed value helps you anticipate property tax expenses. If the assessed value seems inaccurate, you can appeal it to potentially lower your tax burden.

• For Buyers and Sellers: The market value is what drives negotiations during a real estate transaction. A property’s assessed value might be a helpful reference, but the market value is what determines the final sale price.

A Practical Example

Let’s say you’re selling your home. The tax assessed value is $250,000, but similar homes in your neighborhood are selling for $300,000. While the assessed value gives you an idea of your home’s baseline worth, it’s the market value that reflects what buyers are actually willing to pay. Conversely, buyers should be aware that the assessed value might not capture a home’s full potential or align with market trends.

Conclusion

While the tax assessed value is essential for understanding your property tax obligations, the market value is key for real estate transactions. By recognizing the differences between these values, you can make more informed decisions about buying, selling, or managing your property.

Need help navigating property values or planning your next move? Reach out today to get expert advice tailored to your needs!