Urban planning community | #theplannerlife

1. Property tax assessment question

A quick question for the Throbbing Brain. As a rule thumb, what's the difference between market value and assessed value of a residential property. The house that I'm rehabbing, I'm trying to figure out my annual property tax bill.

2. Assessed Value: This is the dollar value placed on a parcel of property by the Assessor's Office. It is computed by analyzing thousands of individual sale transactions, thousands of inspections and a thorough study of all Milwaukee neighborhoods. It is the Assessor's estimate of market value. It is important for maintaining equity between and among all taxpayers in the city.

Estimated Fair Market Value: Is calculated by dividing the property's total assessed valued by the average assessment ratio. This ratio is applied to all property, including personal property, regardless of type or location of the property. In theory, this should approximate the current market value of the property. This value estimate is determined by the Department of Revenue(DOR). It is used to apportion tax levies among municipalities and is used in the distribution of shared revenues.

Our assessor says the fair market value is an estimate of what could be gotten on the market. Ultimately what you get for your property is what you would/could sell it for.

From the Milwuakee assessor's office. http://www.milwaukee.gov/display/router.asp?docid=677

3. Originally posted by GISgal
Assessed Value: This is the dollar value placed on a parcel of property by the Assessor's Office. It is computed by analyzing thousands of individual sale transactions, thousands of inspections and a thorough study of all Milwaukee neighborhoods. It is the Assessor's estimate of market value. It is important for maintaining equity between and among all taxpayers in the city.

Estimated Fair Market Value: Is calculated by dividing the property's total assessed valued by the average assessment ratio. This ratio is applied to all property, including personal property, regardless of type or location of the property. In theory, this should approximate the current market value of the property. This value estimate is determined by the Department of Revenue(DOR). It is used to apportion tax levies among municipalities and is used in the distribution of shared revenues.

Our assessor says the fair market value is an estimate of what could be gotten on the market. Ultimately what you get for your property is what you would/could sell it for.

Is there a rule of thumb that says the assessed value is usually a certain percentage of the fair market value. Since the house is currently being rehabbed, I can't determine the assessed value at this point. However, I do know what the purchase price will be when the house is finished.

4. No. If there are recent sales of the subject property, the assessing office should use that as a benchmark for setting the market value. In theory the assessed value, if the community is at 100% of equalized value, should approximate the fair market value. The fair market value should be I believe within 10% of the most recent sales value or appraisal (at least the that is the case in WI).

If you know the purchase price it should be close to the assessed value.

A quick call to your local assessor's office could confirm/deny what method they would use and their current assessment ratio.

5. You also need to know the taxable value, which is dependent on procedures in your state.

For example, some states cap the taxable value and only let it rise with the rate of inflation. The taxable value can be much less than the true cash value.

6. Originally posted by munibulldog
You also need to know the taxable value, which is dependent on procedures in your state.

For example, some states cap the taxable value and only let it rise with the rate of inflation. The taxable value can be much less than the true cash value.
That doesn't apply here. GISGal is right for Wisconsin. But assessors do not revalue property annually, and do not need to do a "full reval" of every property until the community-wide average drops below 90% of market. This leads to stable taxes for years, then a major shift in taxation as some areas have gained faster than others.

7. From my recent expereince, there is very little correlation between assessed values for taxation and real market values.

As an example, my house was assessed at \$34 k for tax purposes, \$68 k for replacement (insurance) and I sold it for under \$20K.

I think it will depend on market conditions and tax conditions.

8. Originally posted by donk
I think it will depend on market conditions and tax conditions.
And the abilities of the staff in the Assessor's Office.