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An assessment occurs when an asset’s value must be determined for the purpose of taxation.1 Some assessments are made annually on certain types of property, such as business properties. Homes are often valued every year, though some taxing authorities may only do an assessment every five years. Houses are assessed according to their physical condition and comparable values of surrounding residences.
KEY TAKEAWAYS
- An assessment is an evaluation of a specific asset to determine its value.
- The most common assessment that most people experience is the assessment of their property for the purpose of calculating the tax owed on the property.
- Property tax assessments are based on comparable sale prices and the level of tax set by the local or state government.
- Assessments can also be conducted on assets to determine their resale value.
- If a property owner does not agree with an assessment, they have the right to contest it.
How an Assessment Works
The most popular form of assessment is done on properties in order to calculate the amount of property tax owed to a municipality, township, or county. These assessments are done by an assessor, who evaluates the physical structure of a property, its overall condition, land size, etc., and compares the property to the sale prices of other comparable properties in the same area. This assessment is then used to determine just how much tax is owed by the property owner.
The assessments are done by a tax assessor, who is typically appointed or is an elected official. That person will determine the values of properties in a specific area. The information gathered by the assessor is then used by local governments to set tax rates in order to support the community’s annual budget.
Sometimes the assessor will visit the property, but that’s not always the case. Some states have requirements of how often they need to visit properties in order to determine their values
