Buildings and other properties are assessed periodically in order to determine property taxes owed each year. These assessments are done by an assessor, who may be an appointed expert or an elected official. Assessors are trained to determine the fair market value of property, and certification requirements vary by state and municipality.

Here are some of the things the assessor looks at:

• The overall condition and quality of the property

• Land size and location

• Square footage and perhaps a bedroom and bathroom count

• Home features and amenities, such as a swimming pool or tennis court

The assessor then looks at comparable properties in the same area and recent sale prices. The assessment is then used by the municipality, township or county to quantify how much tax is owed by the property owner. Property taxes are often the largest source of revenue for local governments. They pay for police and fire departments, public schools, employees’ salaries and benefits, libraries, parks and recreation, and transportation infrastructure. In most cases, buildings and land used for religious purposes are exempt.

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To determine the value of a property, the assessor may visit the property for a physical inspection, but not always. In many cases, the assessor can look at accumulated real estate data to determine the value of the house or building. 

A building assessment is done to determine property taxes. Photo: Pixabay

In some areas, the assessed value is the market value. Or the assessed value may be calculated by the taxing authority as a percentage of the fair market value of the property. Some states and local governments also tax personal property, such as cars, motorcycles and boats, and assign an assessed value to these as well. (For more on property taxes, visit our Tax Talk column.)

Property tax assessments may be decided annually, or on another schedule such as every other year, or only when the property changes hands. The assessed value may be lower for an owner-occupant compared to a landlord. Property owners who want to dispute the assessed value can request a reassessment, or a second evaluation. 

Assessments differ from appraisals, which are done by banks and other lending institutions to determine the value of a property before they will grant a mortgage to a buyer.