Property Assessment Overview
Market value-based assessment
Market value-based assessment does NOT identify a property’s sale price or a property’s potential sale price.
The assessment does NOT represent an estimate of a property’s value as of the date the owner receives the Assessment and Tax Notice.
Valuation and condition dates
Legislation requires the assessment process to comply with two key dates: the “valuation date” and “condition date”.
The valuation date ensures all properties are valued as of the same date. The valuation date for the 2010 tax year is July 1, 2009. This means the assessment on the 2010 Assessment and Tax Notice is an estimate of value as of July 1, 2009.
The condition date is the “as-of-date” used to identify the physical state of a property for assessment purposes. The condition date for all property other than linear property is December 31. The condition date for the 2010 tax year is December 31, 2009. This means the assessment on the 2010 Assessment and Tax Notice is as of July 1, 2009 and represents the physical condition of the property as of December 31, 2009.
Assessors use information from property that has sold as a proxy to value similar property. Assessors use mass appraisal techniques to analyze registered sales data and physical property data to estimate assessed values. The mass appraisal process analyzes groups of property to estimate the assessed value for each property using common data, mathematical models, and statistical tests.
Change in Assessment and the Tax Rate
Each year some property owners comment on the impact a change in real estate values will have on the amount of property tax they pay. Some owners assume that if the assessment (their property value) goes up/down, then their property tax will also goes up/down. The following example will assist with understanding the impact a change in assessment has on property tax. This example assumes that all property assessments change year over year by the same amount.
To begin with, assume 2 properties worth $50,000 dollars and a $10,000 dollar property tax revenue requirement:
- A 2 property municipality ($50,000 per property) with $10,000 required from property tax would have a tax rate of .10 ($50,000 x 2 x .10 = $10,000 in tax).
- A 6% market increase ($50,000 x 1.06 = $53,000 per property) with no tax increase would change the tax rate to .09434 (.10 divided by 1.06) ($53,000 x 2 x .09434 = $10,000 in tax)
- A 3% property tax increase with no market increase ($50,000 per property) would change the tax rate to .103 (.10 x 1.03) ($50,000 x 2 x .103 = $10,300 in tax)
- A 6% market increase ($50,000 x 1.06 = $53,000 per property) and a 3% tax increase would change the tax rate to .09717 (.10 divided by 1.06 x 1.03) ($53,000 x 2 x .09717 = $10,300 in tax).
Although the 4th bullet includes a 6% market increase and the 3rd bullet does not, the average tax increase for both the 3rd and 4th bullet is 3% or $150 per parcel. Any increase in the overall assessment not shown as a corresponding reduction in the tax rate is a tax increase.