What is meant by assessed value (AV) in property valuation?

Assessed value (AV) is a critical concept in property valuation, particularly within the context of property taxation. The assessed value is defined as the lesser of the real market value (RMV) or the maximum assessed value (MAV) established by law. This ensures that a property’s assessed value used for taxation purposes does not exceed a predetermined threshold, promoting fairness and consistency within the tax system.

By choosing this definition, it emphasizes the regulatory framework in which property values are determined for tax assessment, highlighting the protective measure for property owners from sudden increases in taxes due to fluctuations in market values. The approach to determining assessed value reflects a balance designed to protect property owners while ensuring necessary revenue for local governments.

In the context of the other options, the highest market value is not used for assessed value, as AV must remain within the bounds of real market and maximum assessed values. The average of property values does not accurately describe an AV, as this figure is based on specific property characteristics and assessed according to individual market conditions, rather than an average across a region. Thus, the correct understanding of assessed value is crucial for anyone involved in property appraisal and taxation processes.