Assessment Ratio – Definition

Cite this article as:"Assessment Ratio – Definition," in The Business Professor, updated February 24, 2019, last accessed October 20, 2020,

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Assessment Ratio (Property) Definition

This is the assessed value in terms of dollars that an Assessor’s Office places on a piece of property. It is the market value as estimated by the Assessor. The appraisal department of a district estimates the values of properties and then uses these values to determine the property tax. The appraisal ratio is the ratio of the appraisal value to the market value.

In most countries, the asset value is 100% to that of the market. However, some people decide to value their assets below the market price because a high ratio leads to a higher property tax.

A Little More on What is the Assessment Ratio

Before the tax rate is calculated per the market price, the district is divided into tax zones. The fees charged on several of these tax zones form a property tax account. Each zone has a code in the property tax account. The properties have the same combination of tax zones and tax rates. When the tax rates for all the tax areas are set, they are added to the total tax rate, and then this total cost is multiplied by the estimated value to calculate the tax invoice.

The number of sets to be collected each year is usually limited in most countries. Any increase largely depends on how the real estate is classified. In New York, for example, single-family homes rating can’t exceed 6% per annum of 20% in a span of 5 years. Rental units which are less than ten cannot exceed 8% per year or 30% over five years.

A property owner may object the assessed value of his property by filing a complaint. A court or a review board then evaluate this assessment and then multiplied by the rate provided in the verdict. The level of appeal is assessed to get the value of a legal assessment.

Some rules are used in applying state tax rates. In some states, the proportions are determined by the legislator and then included in the state constitution, e.g., in Kansas and Maryland. Other states base the rates on asset types, e.g., industries and commerce. In Pennsylvania and New York, the rates keep varying from city to city. Usually, regional conditions keep changing every year.

References for Assessment Ratio

Academic Resources for Assessment Ratio

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