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Bridging the Gap: Reconciling Tax Assessed Value and Fair Market Value in Real Estate

Posted by Anthony Serra | Jun 14, 2024 | 0 Comments

Reconciling tax assessed value with fair market value on a property is a common challenge faced by homeowners and real estate professionals alike. Understanding the difference between these two valuation methods is essential for accurately assessing the value of a property for tax purposes and real estate transactions.

Tax assessed value

Tax Assessed Value is the value assigned to a property by a local government for the purpose of calculating property taxes. This value is typically determined by a tax assessor who considers factors such as the property's size, location, age, and condition. The tax assessed value is often based on outdated information and may not reflect the current market conditions or true value of the property.

Fair Market Value

On the other hand, fair market value is the price that a willing buyer and seller would agree upon in an open and competitive market. This value is determined by factors such as comparable sales in the area, property condition, economic trends, and buyer demand. Fair market value provides a more accurate representation of what a property is worth in the current market.

Reconciling The Two

When reconciling tax assessed value with fair market value, it's important to recognize that these two values may not always align. In many cases, the tax assessed value may be lower than the fair market value, leading to discrepancies in property taxes paid by homeowners. Conversely, there are instances where the tax assessed value exceeds the fair market value, resulting in overpayment of property taxes.

Tax Equalization Ratio

In an effort to bring these two numbers into sync, counties in New Jersey calculate an equalization ratio that can be used to adjust the assessed value to be more in line with fair market value. The state publishes a County Equalization table that lists each county and its corresponding equalization ratio. For instance, if your house is assessed for $300,000 by the tax assessor and the ratio in your county is 80%, then the fair market value is closer to $375,000 ($300,000/.8 = $375,000).

Tax Assessment Appeal

If a homeowner feels the assessed value is too high, they can appeal their property tax assessment with the local tax assessor's office. Providing evidence such as recent comparable sales data, property appraisals, or evidence of property defects can help support a case for a lower tax assessment. Such appeals need to be filed by a certain date (by April 1 in most cases in New Jersey) so you need to be aware of that. Additionally, staying informed about local tax laws and regulations can help homeowners better understand how their property taxes are calculated and ensure they are paying a fair and accurate amount.


In conclusion, reconciling tax assessed value versus fair market value on a property requires careful consideration of various factors and may involve appealing the tax assessment with the appropriate authorities. By understanding the differences between these valuation methods and advocating for a fair assessment, homeowners can ensure they are paying an appropriate amount of property taxes based on the true value of their property.

About the Author

Anthony Serra

Tony Serra is a passionate advocate, especially for the elderly, disabled and those of modest means who need the services of an experienced and caring attorney. For more than 30 years, Tony has been helping common, everyday folks navigate their way through life's turbulent waters. Through innovation and utilizing modern technology, Tony and his law firm are now able to offer quality legal services that at one time were prohibitively expensive, at a fraction of the cost. If you need basic legal services, such as a Will, Power of Attorney, Living Will, Special Needs Trust, real estate transactions, uncontested guardianship pleadings and much more, please visit our website and our SMART LAW legal services platform. You will be pleasantly surprised by what we offer and glad you did! Tony is also an experienced mediator and founder of the Conflict Resolution Center of NJ. Tony has specific training in family matters as well as elder law and contested guardianship and estate cases.  


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