Understand the hidden number behind your tax bill and how it’s used to determine what you owe each year.
If you've ever opened your property tax bill and wondered how the county arrived at that number, it begins with something called assessed value. It's one of those real estate terms that frequently appears but is often not explained clearly. Today, I want to break it down in simple terms so you understand what you're looking at and why it matters, especially if you own property or are thinking about renting or investing.
Make sense of your tax bill. The assessed value is the dollar amount that your local government assigns to a property for the sole purpose of calculating property taxes. It's not what your home is worth on the open market, and it's not what a buyer would necessarily pay for it. That number is referred to as fair market value.
The assessed value is usually a percentage of the market value based on the standards set by your local tax authority. So if your home is worth $300,000 and your area assesses at 80%, the assessed value is $240,000, and your taxes are calculated based on that.
“Fair market value reflects what a buyer would pay; assessed value reflects what the county will tax.”
Why the difference matters. This matters because many homeowners assume the assessed value represents their home's actual value, which can lead to confusion. For example, you might see your assessed value and think your home is worth less than it really is, or you might be surprised when your tax bill increases even if your home hasn't been renovated.
Local governments can reassess property values periodically, and depending on market trends, your assessed value may change, even if you haven't made any updates. Understanding assessed value is also helpful if you're budgeting for property taxes, comparing rental properties, or evaluating long-term investment potential. It's one of those behind-the-scenes numbers that quietly impact your finances.
If you're unsure how your property taxes are calculated or would like to understand how assessed value compares to market value, let's discuss. At Tide Property Management, we take pride in making real estate terms more straightforward so you can make informed decisions with confidence.
You can reach me by calling or texting 803-727-7256, sending an email to pierce@tidepm.com, or visiting https://tidepm.com. We're always happy to answer your questions or show you rental options available in your area.
