Assessment is the process of assigning a cash value to property for the purpose of taxation. Assessed property may include land, buildings, business equipment, and inventory. The term assessment also refers to the amount of tax that is levied on a property. The amount of tax is based on the assessed value of the property (see Property tax ). In most cases, assessments are determined by state or local officials called assessors. Assessors may be elected by the voters or appointed by the state or local government.
Assigning a fair and uniform value to property is the chief goal of assessment. Assessors try to determine what property would sell for if it were offered on the open market for a reasonable time and if both buyer and seller were well informed. Assessors make such determinations largely by collecting information about the sales prices of similar property recently sold.
Several problems make it difficult to make a fair estimate of value. One problem is that nearly all properties are different. For example, a large house on the corner differs from a small house in the middle of the block. If recent sales involve only small houses, the assessor must use that information to estimate the value of a large house. Another problem is that sales information quickly grows out of date. Prices more than a year old are probably not a useful guide to current values.
Still another problem is that much property, such as office and medical buildings, is rented rather than sold. The assessor must use information on rental income and expenses to estimate what the building is worth to the owner. Some property–such as factories, power plants, and railroad tracks–is neither rented nor sold. To assess such property, the assessor must collect information on the cost of buying vacant land and building a similar structure.
