Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Mar 31, 2011

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Tax assessors place a “market value” on property for the purpose of obtaining an accurate appraisal. The government uses the market values of given properties to calculate fair tax rates.

Market values in most states are revised (called “revaluation”) every few years. Connecticut, for example, decides “fair market value,” and then charges applicable taxes on 70 percent of that value. Unlike most other states, however, Connecticut’s rules for determining fair market value have been developed by the state’s courts. This means taxpayers who disagree have frequently gone to court to challenge the appraiser’s market value determination.

Do all states use market values to calculate tax rates?

Many states base property tax rates on market value calculations. Market value is defined as the amount of money a typical, well-informed, unrelated buyer would be willing to pay for property on the open market. To estimate market value, the assessor considers a number of factors, including changes in the real estate market, purchase price, what different types of property are selling for, local construction and repair costs, normal operating expenses, rents, and inflation. If any of these factors change, the market values of local properties may change as well.

Many states allow a range of flexibility in accepting calculated market values. In these states, the final assessed market value of a property may be 10 percent above or below the calculated value. This flexibility means there is almost always some leeway in the taxing policy in a county’s tax assessor’s office.

Can assessed market values be appealed?

The term “taxable value” is the dollar value the tax assessor’s best judgment has placed on your property to calculate taxes owed. This means mistakes do happen. A calculation based on judgment can usually be appealed. Property owners can file successful appeals by showing actual estimates or differing appraisals from other qualified experts.

States also apply different tax rates, depending on the type of land. For example, market values and resulting tax calculations are usually lower on undeveloped and forested land, often to encourage development.