Using the Cost Approach to Value Your Property

Ready to Learn How Tax Assessors Use the Cost Approach to Value Your Property?

All states base their assessed value on fair market value (also referred to as “market value”), or a defined percentage of fair market value (here in Georgia, we are assessed at 40% of the fair market value estimate).

Market value can be defined as: The most probable price that a property would sell for on a specific date, in terms of cash, and provided that the property is exposed to the open market, and the buyer and seller are both acting in their own best interests and are not under any undue pressure.

Every state can have their own market value definition, but they all have all or most of the elements of the definition above. Tax assessors typically use a cost approach to value on every property they have to value for property tax purposes. As a property owner, you should have a basic understanding of how this process works.

In this guide, you will learn:

• How the cost approach to value works
• How the different components of the cost approach contribute to the value estimate
• How tax assessors adjust the cost approach subjectively and objectively