Tax assessed values

General Real Estate Investing
1

If appraised values are based upon the recent sales of a comp property. Can you please explain what or how are tax assessed values calculated upon? Is it true that the tax assessed value is always lower than the sale price / appraised value, especially considering that the properties I deal with are foreclosures?

Thanks, Robert

2

You don’t tell us your location so we really can’t be accurate in describing how the assessed values might be determined in your location.

The determination of a property’s assessed value is done by the local assessor. The Assessor takes various factors into account when establishing property value, including:
[]Description of the property and the improvements []Land value []Lot dimensions[]Age of Home and other buildings []Building and square footage[]Value-enhancing amenities[*]Sales of like homes within the neighborhood
The assessed value may be the property’s current market value or a percentage of the current market value.

Once the assessed value is determined for a given year, the assessor might not reassess the property’s market value for several years. In the interim, a formula might be used to adjust the tax assessed value. Here is one method to determine the annual adjustment:
Take the previous year’s taxable value

  • Subtract losses
    X Multiply Consumer Price Index (2.3% for 2005)
  • Add Additions
    Each taxing jurisdiction has its own formula or method. Your local assessor’s website may give you more insight.