What is the formula for calculating Assessed Value?

The formula for calculating Assessed Value is rooted in the relationship between Fair Market Value and the assessment ratios established by local jurisdictions. The Assessed Value is typically determined by taking a percentage of the Fair Market Value of a property. In many areas, this percentage might be 40%, which reflects a common assessment ratio used in various taxation systems.

By multiplying the Fair Market Value by this percentage, you arrive at the Assessed Value, which is the figure used to calculate property taxes owed. This method ensures that the tax burden is based on an equitable valuation of properties as determined by current market conditions.

In contrast, the other options illustrate approaches that do not align with the standard calculations of Assessed Value. For example, the Tax Bill multiplied by a percentage does not yield the Assessed Value directly, as the Tax Bill is the result of multiplying the Assessed Value by the tax rate. Additionally, using the Tax Rate multiplied by Classified Value or the Market Value divided by a percentage misrepresents the relationship needed for establishing Assessed Value within typical valuation guidelines. Thus, basing the Assessed Value on Fair Market Value times the assessment percentage is the correct and widely accepted approach.