ASSESSED VALUATION, the value placed upon real or personal property by governmental authority for purposes of tax ation. It may or may not be an indication of the market value of the property, but in any case, provided the assessments are equitable, it supplies a guide to the relative values of similar kinds of property in the same assessment district. Methods of assessing the valuation of real estate for tax purposes differ in various places. Sometimes valuations are based upon full market value and at other times upon some fraction of the market value. Of the two general methods of raising taxes, a high assessment value with a low tax rate, and a low assessment value with a correspondingly higher tax rate, the latter is much more generally used.
A study of real estate assessment and assessed valuation is of great importance to the dealer and investor in municipal bonds. The debt of a municipality is usually limited by law to a certain percentage of the assessed valuation of the property and the holder of municipal bonds should know the assessed value to be sure that the limit of debt has not been exceeded. Where the assessment is for practically full market value of property the debt limit should be considerably below the assessed valuation to make the bonds sound; but where the assessment represents only one-half or one-third of the market value, as is the case in many communities, the bonded debt may safely approach much more closely to the assessed valuation. Investment bankers who offer municipal bonds frequently state in their circulars not only the assessed valuation of the municipality in question and the ratio of total debt to it, but also the method of assessment and the total estimated market value of all property.