Distinguish market value from assessed value for property tax purposes.

• A. Market value is the price property would fetch in the market; assessed value is the taxable value used to calculate property taxes
• B. Market value is the tax base; assessed value is the sale price
• C. Market value is the replacement cost; assessed value is the insurance value
• D. Market value and assessed value are the same

Answer: (A)

Market value and assessed value serve different purposes. Market value is the price property would likely bring in an open, competitive sale. Assessed value is the taxable value determined by the local assessor to calculate property taxes, often based on market data but adjusted by rules, exemptions, and caps. Taxes are typically computed by applying the tax rate to the assessed value, not the market sale price.

Some jurisdictions set assessed value as a percentage of market value, so the two can differ, but they are not the same thing. The other options confuse tax calculation with sale price or with other valuations (replacement cost or insurance value), which is why they don’t fit.