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What is an Assessed Value?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 November 2016
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    Conjecture Corporation
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An assessed value is the value of a piece of an asset that is determined for the purpose of calculating taxes due on that asset. In the case of real estate, the assessed value is typically the value assigned to the property by the tax assessor’s office associated with the local municipality. The assessed value of property is not the same as the property’s fair market value, although it is not unusual for that market value to be taken into consideration when assessing the property’s value for the purposes of calculating property taxes.

Many jurisdictions make use of a number of different factors to determine the assessed value of property. It is not unusual for the location of the property to play a key role in the assessment, with properties that are located in a desirable area of the municipality receiving a higher value. For example, a desirable real estate property may be a lot that is located in a stable neighborhood near shopping centers, cultural centers, and schools. The condition of structures on the property may also be a major factor, as well as the property’s access to public services such as power, water, and sewage.

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Over time, changes in circumstances can cause the assessed value of a piece of real estate to change. The closure of businesses, rezoning of school districts, or a gradual migration to a new section of town could all lead to a decline in the overall value of an older neighborhood. That decline in value would relate to both the fair market value of properties in the area, as well as the assessment value for each property as determined by the local tax assessor.

Determining the assessed value often includes allowing for the sale prices of property in the immediate area since the last assessment took place. Information of this type may indicate that changes are taking place in the area that will either cause property values to increase or decrease. A neighborhood with a number of empty homes that are not selling would probably result in a lower assessed value in one year. If a shopping mall were built near the neighborhood and capital improvements were made in those unused properties during the next tax year, there is a good chance the assessor’s office would see this as a sign that the desirability of properties in the area has increased. With this in mind, the assessor would adjust property taxes accordingly, resulting in an increase in funds available to provide public services to the community.

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