What is the process for determining the assessment ratio in property assessment?

The process for determining the assessment ratio involves evaluating how the assessed value of a property compares to its market value. The correct approach is to divide the assessed value by the market value. This calculation provides a ratio that illustrates what percentage of the market value is represented by the assessed value.

For example, if a property has a market value of $100,000 and an assessed value of $50,000, the assessment ratio would be 0.5 or 50%. This ratio is important as it helps ensure that properties are assessed fairly in relation to their market values, which in turn impacts tax calculations and property valuation.

The other approaches would not yield a meaningful assessment ratio. Subtracting the market value from the assessed value does not give a ratio; rather, it provides a difference in values. Adding the assessed and market values is irrelevant in terms of assessment ratios, as it does not reflect the relationship between the assessed and market values. Multiplying these values also does not facilitate the ratio calculation but instead gives a product that does not serve the purpose of understanding the assessment in relation to the market. Thus, the division of assessed value by market value accurately defines the assessment ratio.