Certified Residential Appraiser Practice Exam

What is assessed value?

1. The market value of a property

2. The value determined for tax purposes

3. The sale price of a property when it is sold

4. The replacement cost of a property

The correct answer is: The value determined for tax purposes

Assessed value refers specifically to the value that a local government assigns to a property for the purpose of taxation. This figure is used to calculate how much property tax the owner will owe. The assessed value may not directly reflect the current market value of the property, as it can be based on a variety of factors, including local tax rates, valuation methods employed by the assessor's office, and any specific local adjustments. While market value, sale prices, and replacement costs are important concepts in real estate, they serve different purposes. Market value reflects what a property would sell for in an open market, and the sale price is the actual amount a buyer pays when acquiring a property. Replacement cost pertains to the expense it would take to replace the property with a similar one, taking into account current construction costs. Thus, the assessed value is fundamentally rooted in the framework of taxation, distinguishing it from these other concepts.