What is the Difference between Tax Assessed Value and Market Value

It is a common problem that most homeowners have when they buy, sell or get their tax bill in the mail a "What's the difference between tax Accessed Value (TAV) and the Fair Market Value (" FMV ")?"

This question and the answer is critical to your understanding why many property owners who appeal their taxes personally fail. This is not a surprise, and most counties tax assessors (examiners) do not help the situation. REMEMBER, if you appeal and the basis for your complaint is not acceptable, you fall and can not come back again for another year!

Fair Market Value is what a property should be sold in a market that is not in "distress". Distress in this case is not an unusual amount of foreclosures, high or expected high unemployment in the region, a toxic waste dump nearby, floodplains, or other "questions that may cause perspective buyers to look elsewhere for homes.

Evaluation of a property is a question of looking at what others "allegedly similar" properties are actually sold in a limited area around your home, usually 1 / 4 to 1 / 2 km, preferably within your subdivision. We would like to say this estimate is an accurate assessment of what your home will sell for, but frankly, estimates that a high degree a subjective guess. Any appraiser will admit that his assessment is based on his professionalism in estimating the value of your home, but it is still a "best estimate" in his mind. Often, two reviews of the same property can be 10% or more apart. Comparable sales may not take into account the motivation of the seller or the condition of the interior of the property.

FMV is certainly not what your neighbor's home sold for less, plus an upgrade to your large estate. Most houses are bought for emotional reasons, or the practicality of living close to work or school, etc. So a homeowner can get a score, calculate its FMV or ask friends, neighbors and real estate agents to name a few sources. It is very likely that your personal guess, if supported by actually seeing the inside of properties for sale and those who sold and compare those sales or listings or FSBO's (For sale by owner) to your property, so good if not better than all those statements above. For this exercise, let us assume that you've decided your property's FMV is $ 250,000.

If the FMV is $ 250,000, What Tax Assessed value? Normally County Tax Assessor has a formula based on the FMV to calculate your TAV. This formula varies from state to state and county to county, but in general it should be 80% of FMV LESS your deductions. Your deduction, where applicable, include exemptions for some or all of the following: widowed, elderly housing, disabled, homesteaded property, veterans, combat injury, paralysis partial or complete blindness and on and on. It is important that each homeowner to review the full list of exemptions for his county or have a professional tax appeals do it for you because each one exception is money in your pocket, you are entitled. Florida has recently increased his homestead exemption from $ 25,000 to $ 50,000 per homesteaded household. This roughly means that the average homeowner will save an extra $ 350 - $ 500 a year in taxes.

The tax appraiser uses, what he thinks your FMV and multiples it by a multiplier of 80% to 90% of FMV. Here is an actual example of Broward County, Florida: FMV (your last purchase price) of $ 250,000, TAV outside courtyard or any other exemption = $ 212,000 (84.8%). If you homestead your property tax value drops to $ 162.500, but your school board taxable value changes $ 187,500.

If you are a senior disabled Combat-wounded veteran, 65 years have at least 10% disability ratings, to provide evidence of combat damage, and a Florida resident at the time of entry into service, your property taxes are $ 0.00! There are numerous other full exemptions that you or a business tax appeals should investigate immediately, because you may be entitled to huge property tax savings.

If you purchased a home as a short sale or a foreclosure and got a good deal at well below FMV, your purchase price not seen as FMV. Instead, the tax assessor use his "best estimate" based on other properties in the neighborhood. However, he does not take into account the repairs you should do to reduce your taxes substantially. Your professional tax appeals will be able to do this for you.

In the years following your home purchase, the tax assessor determines your assessed value by using a complex mathematical formula to re-evaluate all properties in the county at once. It must be done this way because of the tens of thousands of buildings and minimal staff at the tax assessor's office. In most cases this is not fair to the homeowner and commercial property owner, but fewer than 2% of taxpayers officially protest and fewer than 20% of those who ever get a tax cut. This is primarily due to a lack of understanding the appeal process and be able to reconstruct the data necessary for a successful appeal; your business tax appeals can do all this for you.

In summary, the TAV of your home is usually a percentage of its FMV and under normal circumstances this would be 80% to 90% before exceptions. But for short sale and foreclosure sale could be 200 +% of the purchase price or more. Consult with a local business tax appeals to ensure that you pay only your fair share of your property taxes.