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

The difference between value for tax purposes and market value is an important element of eminent domain law in Virginia. Value for tax purposes is the value of a property as determined by the Virginia Department of Taxation, often for the purpose of calculating taxes levied on it. This value is typically based upon the median sales price of similar properties in the same geographic area, and may be lower than the actual market value of the property. Market value, on the other hand, is the price a buyer would pay for a property in an open market transaction. It is typically determined by the current state of the real estate market, the condition of the property, its location, and other various factors. Market value can be significantly higher than the value for tax purposes as it may take into account the property’s potential for appreciation, as well as other economic considerations. When the state of Virginia exercises its power of eminent domain, the value that is awarded to the property owner must reflect fair market value. This is to ensure that the owner is compensated for the taking of their property and any losses they may suffer as a result. The value for tax purposes is essentially irrelevant in the calculation of market value and they may differ significantly.

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

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