Tax Assessed Value Versus Market Value…What Is The Difference?

In most cases, your home’s market value will vary from its property tax value. Do you want to know why?
When you buy or sell a property, the listing price is typically close to the property’s fair market value. That being said, the tax bill for that particular property would reflect a value called tax assessed value, which could differ by thousands of dollars. Fair market value is the price a home should sell for under normal market conditions in the local market…meaning that the local housing market is not in distress due to a natural disaster or excessive number of foreclosures. The market value is usually determined by comparing the home to similar properties within close proximity and is based upon the sales price of these similar homes. Adjustments are made for things such as number of bathrooms, but the average sales price between those comparative homes is considered the fair market value. Market value has no direct correlation with property tax. It is used primarily for real estate transactions.assessed value of property
Tax assessed value, on the other hand, is usually a percentage of the property’s fair market value as of a certain date (usually January 1st) according to the county tax rate. Local elected officials typically set county tax rates so that counties are able to maintain community services (such as public schools, police, firefighters, hospitals, etc.). Local governments must collect taxes and property tax is one of those sources of revenue. The tax assessed value determines the tax bill amount, which is a specified percentage of the tax assessed value. Most states assess homes at 80 to 90 percent of fair market value. Although some counties around the country, especially in areas with depressed housing markets, only reassess homes every five or 10 years due to the high cost of the reassessment process.
Fair market value and tax assessed values differ in their purpose. Market value is used as a price point in real estate transactions of the specified property. The tax assessed value, however, is used solely to determine the owner’s property tax obligation.
When buying and/or selling a home, it is important to know and understand the differences in assessed value versus market value. Hopefully this helps you understand the importance in those difference.
I would be happy to help you learn more. Contact me for more information. I look forward to hearing from you

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