Understanding the difference between Fair Market Value and Assessed Value is crucial for Fulton County property owners, as it directly impacts your property tax bill. These two terms are related but represent distinct figures in the property tax process. Here’s a breakdown:
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1. Fair Market Value (FMV)
Definition:
Fair Market Value is the estimated price your property would sell for on the open market under normal conditions. This assumes a willing buyer and a willing seller, neither under duress, both with reasonable knowledge of the property and market conditions.Determination:
The Fulton County Board of Assessors is responsible for determining the fair market value of all real property in the county. They use several appraisal methods, including:-
Sales Comparison Approach (Market Approach): Analyzing recent sales of comparable properties nearby, considering size, condition, features, and location. This is the primary method for residential properties.
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Cost Approach: Estimating the cost to rebuild the property today, minus depreciation, plus land value.
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Income Approach: For income-producing properties (like rentals or commercial buildings), estimating value based on potential income generation.
Importance:
Fair Market Value is the starting point for calculating property taxes and represents the full value of your property according to the county’s assessment.
2. Assessed Value
Definition:
Assessed Value is 40% of the Fair Market Value in Georgia, including Fulton County. This is the taxable portion of your property’s value.Calculation:
Assessed Value = Fair Market Value × 0.40Example:
If your property’s Fair Market Value is $500,000, then:
Assessed Value = $500,000 × 0.40 = $200,000Importance:
The Assessed Value is the figure to which the millage rate (tax rate set by county, school board, and city) is applied to calculate your actual property tax bill.
In Simple Terms
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Fair Market Value: The full “sticker price” of your property.
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Assessed Value: A “discounted price” (40% of FMV) that tax authorities use to calculate your taxes.
Why the Difference?
Georgia law requires taxing property based on the Assessed Value rather than the full Fair Market Value. This system helps stabilize tax revenues and provides some protection against large fluctuations in property values year to year.
Key Takeaways for Fulton County Property Owners
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Your Property Tax Assessment Notice will show both Fair Market Value and Assessed Value.
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Property taxes are calculated based on Assessed Value, not Fair Market Value.
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When appealing property taxes, you challenge the Fair Market Value assigned by the Board of Assessors.
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If your appeal is successful and the Fair Market Value is lowered, the Assessed Value and your tax bill will also decrease.
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Understanding this difference helps you make informed decisions when reviewing your assessment or filing an appeal.
Final Thought
A high Fair Market Value does not automatically mean your tax bill is unfair, since taxes are based on the 40% assessed value. However, if you believe the Fair Market Value is inflated, it is important to act quickly within the 45-day appeal window provided by Fulton County.
By understanding the distinction between Fair Market Value and Assessed Value, you can better navigate the property tax system in Fulton County, Georgia, and ensure your taxes are fair.
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