What is the difference between value for tax purposes and market value?

The difference between value for tax purposes and market value lies in the purpose of each, as well as the process for determining each. Value for tax purposes is the value used by the local government to calculate taxes due on a particular property; typically, this figure is lower than market value. Market value, on the other hand, is the estimated worth of a property based on its current market, or what it would fetch if it were to be sold. To determine value for tax purposes, the local government will look at the recent sale prices of similar properties in the area, as well as the features and condition of the specific property in question. This value is then divided by the amount of assessment points in a certain area to calculate the property’s assessed value. The assessed value is then used to calculate the amount of taxes owed on the property. Market value, on the other hand, is determined by estimating the fair market price that a buyer would be willing to pay for the property, based on its current condition, amenities, and features. Market value may also take into account the sale prices of comparable properties in the area to determine the estimated value. This type of value is typically more than the assessed value. Eminent domain law in Maryland supports the concept of fair market value. A property owner in Maryland can challenge a proposed condemnation by the government if the appraised value is lower than the fair market value, and the court will take into consideration the fair market value when determining the compensation owed to the property owner.

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What is the difference between value for tax purposes and market value?

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