What does "market value" differ from "assessed value"?

The distinction between "market value" and "assessed value" is critical in the field of property taxation. Market value is essentially the price a property would likely sell for in the current real estate market, reflecting current sales prices and trends. It is based on recent sales of comparable properties and typically indicates what buyers are willing to pay at a given time.

In contrast, assessed value is the dollar value assigned to a property for tax purposes. This value is determined by local tax assessors and is often a fraction of the market value. The assessed value is used to calculate property taxes owed by a property owner, but it does not always reflect the property's current market conditions or sales prices.

Understanding this difference is important for property owners, investors, and those involved in real estate transactions, as it can impact financial decisions and tax liabilities. The other choices do not accurately capture the relationship between market value and assessed value, reinforcing the significance of recognizing market dynamics versus the administrative assessment processes.