What is an Assessment and How Does it

What is an Assessment and How Does it Affect Me?

Assessments � An assessment is the value placed on a property for taxing purposes ◦ This value can be determined by a combination of means: �Sales of this property or similar properties �Replacement/Construction cost of a property �Income created by a property (commercial) ◦ One or more of these methods is used to calculate the assessed value of a property

How Assessments Determine Taxes $100, 000 In 2000 a contractor builds three identical homes in a county. All are assessed for $100, 000.

How Assessments Determine Taxes $100, 000 These are the only three properties in the county. The county budget is $600. To determine how much of the budget each property will pay the budget is divided by the total assessment for the county. $600/$300, 000 =. 002 This factor is called the Mill Levy. $100, 000 The mill levy multiplied by each properties value provides the taxes for that property. $100, 000 x. 002 = $200 $100, 000

How Assessments Determine Taxes A : $150, 000 B : $250, 000 C: $75, 000 So ten years down the road the houses have changed. House A has been maintained at a normal level. House B has had its basement finished and a garage built. House C has been used as a rental, never updated and is in desperate need of a new roof and some foundation work.

How Assessments Determine Taxes $150, 000 These are the only three properties in the county. The county budget is $600. To determine how much of the budget each property will pay the budget is divided by the total assessment for the county. $600/$475, 000 =. 00126 This factor is called the Mill Levy. $250, 000 The mill levy multiplied by each properties value provides the taxes for that property. $150, 000 x. 00126 = $190 $250, 000 x. 00126 = $315 $75, 000 x. 00126 = $95 $75, 000

How Assessments Determine Taxes So lets compare a few scenarios: The budget is $600 except where stated otherwise House A House B House C Original Houses $100, 000 $200 Only Budget Increases ($900) $100, 000 $300 All Assessments Increases Evenly $200, 000 $200 Reassessment $150, 000 $190 $250, 000 $315 $75, 000 $95 Some Assessments Decrease $75, 000 $180 $100, 000 $240 $75, 000 $180 All Assessments Decrease $75, 000 $200

Other Factors � There actually three factors used to determine a properties taxes: ◦ Assessed Value ◦ Mill Levy ◦ State Factor �Assessed Value x Mill Levy x State Factor = Taxes � For our previous examples: ◦ we assumed a state factor of 1 or 100% ◦ however the state factor changes every year and can vary from 85% to 100%. �That is you pay taxes on between 85 -100% of your total assessed value every year as determined by the state.

State Factors � Last Year the State Factors for Fall River County were as follows: ◦ Ag properties: 85% ◦ Non-Ag properties: 94. 6% �This means that those with properties classified as Ag paid taxes on only 85% of their assessed value while those with Non-Ag properties paid taxes on 94. 6% of their assessed value