Your tax district’s municipal assessor will determine the assessed value of your home. It is a yearly estimate of the home’s value. This value is used by local tax officials to calculate the property taxes that you will pay each year on your home. Find out how this value is calculated.
What is the assessed value of a house?
A house’s assessed value is the dollar amount that is given to it in order to calculate its property tax. The municipality property assessor determines the assessed value of every home in a particular tax district. While some assessors are employed by a municipality or a village, most work for a city or town.
No matter if you live in a county-based or city-based tax district your assessed home value will be based either on the market value or the appraised value. Or a uniform percentage of both.
The market value of your home is the price it would sell on a free market if there was a buyer and a seller willing to sell. An appraiser determines the home’s value. This is called the appraised value.
A majority of states require that a residential property be valued at its market value. The assessment will typically be lower than the appraised or market value. Assessors might conclude that appraisal and market values are not accurate representations of the home. Therefore, they use an assessment rate for calculating the assessed value.
To determine the value of the property, officials also look at other information like the sale history and neighboring property values.
The home is not inspected before the estimate is made. This can result in an inaccurate valuation. If the assessed value of the property is higher than its fair market value, it is most likely that the town has overassessed the property and the owner is paying too many taxes.
Because the market value can fluctuate multiple times per year, the assessed value of a house is less than the market.
A property that has been recently resold is more likely to have an assessed value that one that hasn’t sold for a while. The area’s laws may limit the amount that assessed values can increase each year.
What determines the assessed value of a home?
To figure out your assessed value, an assessor will look at your property and surrounding. The market approach is used by the assessor to determine the value of a property based on similar properties’ selling prices.
This method is used to determine the assessment rate and the market value. As shown below, the market value and the assessment rate are multiplied to calculate the assessed value.
The assessment rate can be a percentage up to 100% that considers factors that could increase or decrease the value of homes in an area.
These factors typically include the current market conditions, other home value, maintenance cost, home improvements and neighborhood size. The assessment rate for each property within a tax jurisdiction is usually the same.
Assessors most often use an algorithm to determine the market value and assessment rate of a property. This involves entering general information about each property, and then comparing it with similar properties. Although this is a common method for all properties in the area it can lead to incorrect valuations in some cases.
Your taxes will be higher if your assessed value is higher. Because of the poor quality of the surrounding area, distressed areas have lower assessed values. Areas with more people and economic activity tend to have higher assessed value. These values can be found in property records.
You can compare the assessed value to the asking price when you are thinking about buying a home. The assessed value is adjusted each year and does not reflect the actual selling price or asking price of a home.
How to calculate the assessed value of your home
To estimate the home’s assessed value, the homeowner will need to know the property’s market price and the assessment rate.
A second option gives consumers an opportunity to use their property taxes bill and the real estate tax rate for their county. You can enter the information below in the calculation.
Assessed value = Market Value x (Assessment rate / 100).
The market value of the property is used to calculate the first calculation. To calculate the assessed value, the market value is multiplied with the decimal assessment rate.
You can find out the market value of your property by asking a professional appraiser or asking local officials. Visit the website of your county or contact a local official to find out your assessment rate.
Let’s suppose you are looking to purchase a house worth $150,000. You want to calculate the assessed value.
To find out the assessment rate in your area, you call the tax department. It is 90%. These two values can be multiplied to get the assessed value. This will give you $135,000.
| Values | Calculation |
|---|---|
| Market Value = $150,000Assessment Rate: 90% | $150,000 x (90/100).Assessed Value = $135,000 |
The second calculation takes into account your property tax bill as well as the area’s tax rate. This bill is sent to you by the department of finance or taxation in your county approximately one month before your taxes due.
The combined assessed value of all properties within the area determines the tax rate. You can find out more by visiting the website of your county or calling the department of finance or taxation in your county.
These values can be used to divide your property tax bill number by the tax rate in order to calculate the assessed value.
Assessed value = Property Tax Bill x 100 / Tax Rate
Let’s say you own a house and need to know its value. The property tax bill arrives and is approximately $1,350.
Next, check the website of your county to determine if your tax rate has been increased to 1%. These two numbers will allow you to divide $1,350’s bill by 1%. This will give you $135,000.
| Values | Calculation |
|---|---|
| Property Tax Bill = $1.35090% Tax Rate | $1,350 x 100/1)Assessed Value = $135,000 |
How to challenge an assessed property value
There are steps you can take to challenge your property tax bill if you feel your property is not accurately valued.
Check the information your local government holds about your house. Make sure every feature is correct. This includes the dimensions, number of bathrooms and other factors that influenced your valuation. You can contact your local government to correct any errors.
You can also compare your tax bill to those of neighbors who have similar homes to yours. This is an option if you don’t have the funds. You can get your property assessed by a professional, for $400-500, and then compare the results to the assessed value.
If you believe your property has been incorrectly assessed despite having checked all data, contact your local assessor to contest it and request a second valuation.
You have generally 30 days to contest the bill. However, the exact timeframe will depend on the local government. If the second review fails, you can appeal to an impartial board with or without a lawyer.
A filing fee may be necessary and an appeal could take up to a year, particularly if there are many appeals.