How does local government determine the assessed value of a property?

The assessed value of a property is primarily determined through a standardized assessment method prescribed by statute. This approach ensures consistency and fairness in property taxation across the municipality. Local governments utilize various methodologies, such as mass appraisal techniques, cost approaches, sales comparison approaches, and income approaches to property valuation. These methods provide a systematic framework for assessing property values based on different factors, including property characteristics, market trends, and comparable sales.

This standardized method is important as it establishes a uniform process that can be uniformly applied to all properties within the jurisdiction, helping to limit discrepancies that can arise from subjective evaluations or individual assessments. It also enables local governments to generate stable revenue from property taxes, which is critical for funding public services and infrastructure.

Other options, while they may have some influence on property value estimations, do not serve as the primary basis for assessed values as established by local regulations and statutes. For example, comparing to the highest sale price in the area doesn't account for varying property characteristics or the overall market context. Similarly, while recent property developments might provide insight into market trends and desirability, they do not directly influence standardized assessment processes. Lastly, basing assessments on the owner’s declared value could lead to inconsistencies and potential undervaluation or overvaluation,