Legal Definitions - assessed valuation

Assessed valuation refers to the value that a government tax authority assigns to a property for the specific purpose of calculating property taxes. This value is determined by a tax assessor using established appraisal methods and local tax laws. It often represents a percentage of the property's estimated market value, rather than its full market price, and serves as the basis upon which tax rates are applied.

• Example 1: Residential Property Tax Calculation

  A family owns a house in a community where the local government assesses properties at 60% of their estimated market value. If the tax assessor determines the house's market value to be $350,000, its assessed valuation would be $210,000 ($350,000 x 0.60). This $210,000 figure is then used by the county to calculate the family's annual property tax bill, based on the prevailing tax rate.

• Example 2: Commercial Real Estate Taxes

  A company owns an office building in a bustling city center. The city's tax department sends an annual notice stating the building's assessed valuation is $5 million. This value is derived from the assessor's appraisal of the property, considering factors like its size, location, and potential rental income. The city then applies its commercial property tax rate to this $5 million assessed valuation to determine the company's tax obligation for the year.

• Example 3: Impact of Property Improvements

  A homeowner decides to build a new detached garage and renovate their kitchen, significantly increasing the utility and potential market value of their property. After these improvements are completed, the local tax assessor conducts a new appraisal. The property's original assessed valuation of $150,000 is subsequently increased to $185,000 to reflect the added value from the new construction and renovations. This updated assessed valuation will lead to a higher property tax liability for the homeowner in the following tax cycle.