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square footage, age of the structure, the number of bedrooms and bathrooms, lot size, and
features like garages and pools. A tax assessor would not normally take into account things
like the attractiveness of the landscaping, interior decoration, or age of the roof or furnace,
even though those factors might well affect the property’s market value.
Assessed values often differ from actual market value in another important respect. In
some jurisdictions, the assessed values of properties may fall far below the realistic market
value across the board. It is not uncommon for assessed values to be as low as half of a
reasonable appraisal of market value. In some areas the assessed value of a property may
be even lower; assessments that run 5% or 10% of a reasonable appraisal of market value
are not unheard of. If Josh’s house is assessed for $75,372, that figure may be in line with
its actual market value. Or, depending on how appraised values are set where he lives, that
assessed value might indicate a house worth many times that much.
While the assessed value need not be in line with actual market value, tax assessors
must follow certain fairness guidelines when setting assessed values. If Josh’s house is
actually worth $250,000, he might feel as though he is getting a bargain being assessed at
only $75,372. But if his neighbor has a similar house assessed at only $50,000, he is prob-
ably is not getting a fair deal. Fairness requires that similar properties should receive simi-
lar assessments. So even though the assessed value may differ dramatically from market
value, we would expect that different properties in the same jurisdiction would be assessed
at roughly the same percent of their market value. This percentage may be referred to as
the uniform assessment percent.Example 9.3.1 Josh’s house, assessed at $75,372, has a fair market value of
around $250,000. Find the uniform assessment percent based on Josh’s assessment,
and use it to approximate the assessed value of a house worth $350,000 in this same
tax jurisdiction.Josh’s assessment is $75,372/$250,000 30.15% of market value. This is our best available
estimate of the uniform assessment percent. Applying this to a $350,000 house, we arrive at
a $105,525 assessed value.It might also be reasonable to assume from these numbers that the uniform assessment
percent is actually intended to be 30%. In that case, we arrive at a (30%)($350,000)
$105,000 assessed value.In either case the calculation is an approximation, since Josh’s house is probably not worth
exactly $250,000, nor is the house in question likely to be worth exactly $350,000.As much as we might want to have a precise percentage to apply uniformly to the exact
fair market value of each property, the best we can reasonably hope for is consistency,
not perfect uniformity, since this is all based on estimates. As discussed above, even in
areas where properties are supposed to be assessed on their fair market value (called full
assessment), the assessed values will not exactly agree with actual market prices.
Still, even though perfect fairness is impossible, taxpayers have a right to expect
assessments to be reasonably consistent in relation to actual property values. A taxpayer
who believes that his assessment is unfair may file a tax grievance or appeal requesting
that his assessment be lowered. For example, if Josh could demonstrate that residential
properties in his area are assessed at an average of 20% of market value, he would probably
have a strong case to appeal his assessment. (On the other hand, if Josh just doesn’t like
how high his tax bill is, but can’t demonstrate that he is being treated worse than anyone
else, he is unlikely to have much success.) Each jurisdiction has its own procedures for
filing assessment appeals.
If we know the uniform assessment rate and a property’s assessment, we can use
these facts to find the fair market value being assumed, though that requires a bit of
algebra.Example 9.3.2 Suppose that the uniform assessment rate is supposed to be 25% in
Boltonboro township. What market value does a $53,502 assessment suggest?9.3 Property Taxes 399