Tax Assessment vs Market Value

I'll do my best to keep this post informative, but interesting to read. I try to stay away from too many posts about the boring blah, blah, blah part of my job, but I have been getting many buyers feeling like the tax assessment of a property is going to give a likely reflection of the market value. NOT TRUE!

Let's start by defining the two - Tax Assessment is the value assigned to a property by the government in order to determine the yearly taxes due. The taxes may be levied on a Capped Assessment which means, although the actual assessment of the property may increase over time, the taxes will be based on a set amount for that owner. Tax assessments creep up over time but normally do not jump significantly unless building permits are drawn on the property or the property sells.

Market Value is the cash value of the property based on current market conditions, historical sales and improvements and upgrades to the property which are immediately reflected in an increase in Market Value. Market Value fluctuates significantly and depends on things that surround the property but may not be directly part of the property.

Now let's compare the two - say a property has been in the same family for 20 years, they have done numerous small improvements to keep it updated and maintained the property very well. The tax assessment will likely be very low compared to the market value because it has not sold recently or had major renovations done to justify an assessment increase. This home compared to similar homes in the area that have sold recently it is on par with what's fetching a good price and therefore worth about the same amount as the very similar properties nearby.

An excellent example here in the Annapolis Valley is farm land. Cleared agricultural land with high soil quality, access and improvements such as irrigation and drainage is worth in the tens of thousands per acre! Lets say we had 50 acres of prime cleared land on the Valley floor in Kings County, it's market value could be nearing $500,000 while the tax assessment is going to be probably less that $20,000.

The moral of the story is that Tax Assessments do not necessarily reflect what a property is worth. If you want a professional opinion on what your property is actually worth in todays market, I would be happy to assist you in determining that! 

Call me! 902-680-2736