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House, Commercial Property or Rental Building: What Is a Municipal Assessment Really Worth?

Published: Wednesday, September 3rd, 2025

House, Commercial Property or Rental Building: What Is a Municipal Assessment Really Worth?

What is a municipal assessment?

A municipal assessment is the value assigned by a municipality to a residential, commercial, or income property. It is mainly used as the basis for calculating property taxes and is generally updated every three years by municipal assessors.

Unlike market value, this figure does not necessarily reflect the actual selling price of a property today. It is primarily designed to ensure tax fairness among property owners.

How is it calculated?

Assessors take into account several factors:

  • The size and location of the lot

  • The building’s features: dimensions, number of rooms, materials, renovations

  • The use of the property: residential, commercial, rental, or mixed-use

  • Comparable sales in the area, adjusted to reflect each property’s characteristics

    • These data points are combined to establish a uniform value recorded in the assessment roll.

    Municipal assessment vs. market value

  • Market value: the amount a buyer is willing to pay based on current supply and demand.

  • Municipal assessment: an administrative value, which may be lower or higher than the real selling price depending on the timing of the last update and market conditions.

    • In fast-growing markets, properties often sell well above their municipal assessment.

    Why does it matter?

  • Property taxes: your tax bill is directly tied to this value.

  • Real estate transactions: the assessment serves as a reference point but does not replace a market appraisal.

  • Financing: banks rely more on professional appraisals or market comparables than on municipal assessments.

    • Commercial and income properties

    For these types of properties, additional factors are considered:

  • Rental income and revenues generated

  • Occupancy and vacancy rates

  • Operating expenses (taxes, maintenance, insurance)

    • This helps reflect the economic value of the property beyond its physical characteristics.

    Conclusion

    A municipal assessment is a useful tool for understanding taxation and positioning a property within the market. However, it should not be mistaken for actual market value. Whether you are buying, selling, or investing, it is best to compare this figure with a professional appraisal and current market trends.

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