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Understanding Assessed Value: A Guide by O1ne Mortgage
Assessed value is a crucial concept in the realm of property taxes. It represents an estimate of a home’s monetary worth, used by municipalities and other taxing jurisdictions to calculate property tax bills. This value is often referred to as a home’s tax value.
What Does Assessed Value Mean?
Assessed value is determined by professional assessors and recorded on municipal tax rolls. Depending on your location, the assessment may be conducted by your county, city, or town. Typically, your home will have one official assessed value shared by all jurisdictions that levy property taxes, including school districts, libraries, and fire, water, or sewer districts.
How Is Assessed Value Calculated?
Assessments are based on various property attributes, such as:
- Square footage of living space
- Number and types of rooms
- Size and location of the lot
- Amenities or special features like extra garage bays, outbuildings, decks, or built-in pools
- Sales prices of similar properties sold nearby in recent months
Unlike appraisals, assessments are often conducted without a walkthrough of the property. Drive-by assessments are common, and public records may be used to document your home’s characteristics. However, if you’ve made significant renovations or suffered damage, an assessor might schedule a site visit to evaluate changes to your home’s tax value.
Assessed Value vs. Appraised Value vs. Market Value
While assessed value is used for property taxation, appraised value estimates a home’s current market value, and market value is the amount a buyer is willing to pay. These values differ in terms of who calculates them, who requires them, and how they are used:
| Assessed Value | Appraised Value | Market Value |
|---|---|---|
| Estimated value for property taxes | Estimate of current market value | Amount a buyer will pay |
| Determined by professional property assessor | Determined by professional property appraiser | Determined by real estate professionals and homebuyers |
| Required by municipal tax authorities | Required by lenders for mortgages or loans | Required by homebuyers and sellers |
| Updated typically every five years | Updated anytime the home is financed or used as collateral | Updated anytime a home is sold |
How to Calculate Your Property Taxes Using Assessed Value
Many municipalities base taxes on a set percentage of your home’s assessed value, known as the “assessment ratio.” Property taxes are calculated by multiplying the assessed value by the assessment ratio and then by the municipal mill rate. For example, in a town with a 70% assessment ratio and a mill rate of 32, the annual property tax on a home with an assessed value of $350,000 would be $7,840.
To calculate your annual property tax bill:
Tax Bill = (Assessed Value × Assessment Ratio) × Mill Rate / 1,000
A Final Assessment
All 50 states have property taxes, and a home’s assessed value is key in determining your annual tax obligation. Since lenders often include property taxes in mortgage payments, the assessed value will also impact your monthly mortgage payments.
If you’re considering a home purchase, it’s wise to investigate property taxes to understand their effect on your budget. For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. Our experts are here to help you navigate the complexities of home financing and ensure you get the best terms possible.
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