Folks often ask me how much their homes are worth. That answer varies based on who is doing the assessing and for what purpose. Your fair market value is different than your assessed value. So what’s the difference?
What Is Assessed Value?
The assessed value of your home is a value assigned to the property for the purpose of measuring taxes. Yep. This is the value that matters to Uncle Sam — and really only exists for tax purposes.
How Is Assessed Value Computed?
The values are assessed annually and the method for computation varies greatly from state to state. Typically it’s calculated as a percentage of the fair market value of your property and takes into consideration comparable home sales and inspections when calculating the assessed value. In many cases, it may be a computerized calculation and based solely upon area real estate data. The requirements for physical assessments — where a government assessor actually comes out to your property to do an in-person assessment — also widely varies. It may be every few years, or it could be much longer. The majority of assessments are based upon statistics in your surrounding area.
How Does the Assessed Value Compare to the Fair Market Value?
In most cases, your assessed value is lower than the fair market value of your home. Because this is the case, the government can use the fair market value in its calculations. As I mentioned above, the assessed value may be calculated as a percentage of your fair market value. This percentage can be 10 percent (which is low) all the way up to 100 percent.
How Do I Know What My Assessed Value Is?
Because Uncle Sam wants his tax dollars, he’ll be sure to alert you to your annual assessed value … well, annually. It’s required by law. You’ll get a statement in the mail showing your current value and the amount of taxes you will be paying. Most statements also show you one or more previous years for comparison.
What If I Think My Assessed Value Is Wrong?
Just like most legal issues, you have the right to appeal your assessment. If you think the assessor could have computed your value based upon incorrect square footage or assumed that the current market value is higher than it actually is, an appeal is an appropriate response. Though not a guaranteed calculation, you can use this Virginia Property Tax Calculator as a comparison tool. Most areas require a written request asking for a re-evaluation and ask that you present your case. Requirements vary by state. In Virginia, you petition your county. Call the tax assessor’s office to learn about paperwork requirements and to get started.
Just remember as you receive your statements, the assessed value is not likely to be the price you’d receive if you were to sell your home today. Fair market value and assessed value are two different calculations. If you’re looking to put your home on the market, contact me. I’ll complete a Comparative Market Analysis to help us determine the best listing price for your home. And when you list with me, I’ll stage your home for free when we use your furniture. One less task on your to-do list!