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How the Assessed Value of a Home is Determined

written by: Kantha Wijeratne•edited by: Jean Scheid•updated: 7/14/2010

Discussions on home valuations can sometimes be confusing. Market, replacement and assessed values refer to dollar amounts placed on your home for different purposes. What is the assessed value of a home? Read this article to learn more about property valuations.

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    What Is Meant by Assessed Value?

    The assessed value of your home is the base that is used to calculate the property taxes you pay to your municipality or county. By learning what is the assessed value of a home, It can help to budget funds for this tax and pave the way to appeal any dues that you believe are excessive.

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    How Does the Assessed Value Determine Property Taxes?

    The property tax you pay is an ad valorem or value added tax. It depends on two factors. The first is your home’s taxable assessment. The second is the rate of taxation or mill rate used by the taxing authority. It is the rate per thousand dollars of the assessed value of your home. The tax rate is determined by the amount of funds that the city or county needs to collect through taxes to fund services such as fire protection, police, schools, roads, and other public services. The tax that is ultimately paid will also depend on any full or partial exemptions that may be granted by the taxing authority.

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    How Is Your Home Assessed?

    All land and any improvements made on your property in the form of permanent structures are referred to as real property. The real property in a tax jurisdiction consists of homes, schools, religious, industrial, and commercial institutions. Although all units are assessed, not all units are taxable. For instance, most charitable organizations as well as government owned property are exempt from paying property taxes. Veterans are eligible for a partial exemption of property taxes.

    The assessment of your property or home is made by an appraiser who is appointed by the municipality or county office. The assessor provides an independent estimate of the property based on criteria laid down by the county as well as from expertise gained about the sector. The market value of similar properties in the area and its surroundings are also considered in this assessment. Some properties can be assessed based on replacement value. For commercial buildings, the incomes generated from operations are also factored into the valuation.

    The assessed value of the home or property is determined by multiplying the appraised value of the home by a percentage rate as decided by the taxing county or city. Some states may decide to use a uniform rate for all assessing units. Others may use different rates by classifying units as residential, commercial or legal units. Any full or partial exemptions provided on a property are then considered to arrive at the taxable assessed value.

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    How the Assessed Value Determines Your Property Taxes

    The property tax rate is determined by dividing the tax levy, the amount to be raised by each county or special district, by the assessed value of all properties within that jurisdiction. Each district whether school, fire or municipality may have different rates of taxation. This rate is sometimes referred to as millage or mill rate expressed as the amount payable per $1000 value of property. The taxable assessed value of your home or property is multiplied by the tax rate to calculate the property taxes due from you.

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    How to Find Out the Assessed Value of Your Property

    By law, your property tax statement should provide the basis of calculating property taxes by providing the assessed value of your property and the rate of taxation. While some jurisdictions value properties each year, others undertake it periodically say, every four years. In general, the property taxes you pay vary with market values for the area. It can also change from year to year based on changes in tax rates by taxing units as well as inclusion of new districts or removal of others.

    Most states and counties have a dispute resolution process in place to handle inquiries relating to tax payments. A discrepancy may result from an incorrect calculation of taxes or arise from an over-valuation of your property. Speak to the tax assessors’ office in your area about this. Proper documentation such as a current appraisal report or a report originally prepared by the tax assessor is important if a formal appeal is to be made.

    What is the assessed value of a home? Understanding what this means and how it is determined can ensure that you do not pay any excessive taxes on your property.






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