What is the Assessed Value?

The assessed value term determines the worth of the Real Estate. It can be defined as the dollar value that’s allotted to the property in order to find out the Taxes. The government calculates the dollar value of the property, which is then used to evaluate the tax that will be applicable to the property. It is important to note that the assessed value of the property tends to be lower than the Market value. As mentioned above, this calculation is done to determine an appropriate Tax Base. The tax authorities use the assessed value of the property in order to identify the tax base and figure out other basic details about the property.

The government hires a qualified and professional assessor who is in charge of calculating the property taxes that’ll be applicable to the building. The assessor will evaluate the value of the property and calculate the applicable taxes after excluding all the tax exemptions. Whatever value the assessor comes up with will be multiplied by the assessment ratio. It goes without saying that the higher the assessed value of the property is, the higher the taxes will be applicable to the building.

Uses of Assessed Value of the Property?

In order to calculate the assessed value of the property, the assessor will take the age, location, layout, as well as condition of the property into consideration while calculating the property value. Note that the value of the property will be the same for the next 12 months until it is reassessed. Another important thing you must know is that any home improvement, furnishing, and other renovation to your home will not increase the assessed value of your property. There is a high chance the appraiser will inspect your property value from the outside.

Assessed Value Formula for Property Tax

Value X Millage Rate X Assessment Ratio = Effective Property Tax

While changes in your interiors will not affect the assessed value, they will have a great impact on the market value of your property. As mentioned above, the appraisal value or the market value of your property will be higher than the assessed value. Make sure you do not confuse the assessed value for the market value, as both are different and used for different purposes. The market value keeps changing from time to time, in fact, it could change every single week depending on the home upgrades, renovation, and the demand and supply factors.

Assessed value, on the other hand, will not change for the next 12 months. The assessed value will only give a rough estimate of the value of the real estate. It is not considered for evaluating the resale value of your property. The main application of this value is for the evaluation of taxes. Besides, it is also used for identifying the coverage requirement. If the property taxes were calculated on the market value of the real estate, it would be super expensive. That’s the reason why the government employs an appraiser for evaluating the assessed value of the property to charge a reasonable tax.