Assessed Value

Assessed Value is a tax concept that sets the taxable worth of real property by applying an assessment level to its fair market value.

Definition

Assessed value in Philippine real estate is the fair market value of land, buildings, or improvements multiplied by an assessment level set by the Local Government Unit under the Local Government Code (RA 7160). It is the base for computing Real Property Tax (RPT) (amilyar) and related levies, and it is typically lower than market value because assessment levels are discounted percentages. LGUs publish schedules of values and assessment levels by property classification.

Key Components

• Fair market value from the LGU schedule of values or recent appraisal.
• Assessment level (%) based on use (residential, commercial, industrial, agricultural).
• Assessed value formula: fair market value × assessment level.
• Tax base for Real Property Tax (RPT), Special Education Fund levy, and penalties.
• Records reflected in the tax declaration and checked with the Registry of Deeds.

How It Works

1. LGU sets fair market values and assessment levels through ordinances.
2. Property owners get a tax declaration showing the computed assessed value.
3. RPT is computed using the assessed value, applying the LGU rate (up to 1% for provinces, up to 2% for cities/Metro Manila).
4. Owners pay amilyar on schedule and keep receipts for due diligence and transfers.
5. Changes in use or improvements trigger reassessment and updated tax declarations.

Pros & Cons

• Pros: Predictable tax base; lower than market value due to assessment level; transparent formula.
• Cons: May lag behind current market prices; reassessment can raise taxes; varies by LGU.

Real-World Application (Philippine Real Estate)

• Buyers and brokers use assessed value to estimate amilyar and factor carrying costs into offers.
• Sellers verify assessed value before closing to avoid underpayment of Real Property Tax (RPT) and penalties.
• You can track payments and reminders through Payment Tracking and benchmark pricing with Property Analytics alongside Price Per Square Meter Trends.

Related Terms

• Real Property Tax (RPT)
• Amilyar
• Price Per Square Meter Trends
• Property Analytics
• Registry of Deeds

References

• Republic Act No. 7160 – Local Government Code of the Philippines (Book II, Title II)