Assessed Value refers to the dollar value assigned to a property by a public tax assessor for the purposes of taxation. This value is used to determine the property taxes that the owner must pay annually. The assessed value is typically a percentage of the property’s current market value, which is the amount a property would sell for under normal conditions. The method of assessment varies by jurisdiction but often takes into account factors such as the property’s size, location, and improvement value.
The assessed value is important for investors because it directly affects the property’s annual tax burden, which can impact the overall return on investment. Investors often look at the assessed value when evaluating the potential expenses associated with a property, as well as when comparing similar properties in the same tax district. It’s also used in the calculation of property tax appeals, should the owner believe the property has been overvalued by the tax assessor.
Keep in mind that the assessed value is distinct from the appraised value, which is determined by a professional appraiser and often used for the purpose of obtaining a mortgage, and the market value, which is the estimated amount the property would sell for on the open market.