Property Tax Equalization for the Real Estate Investor

Taking a neighborhood that has low assessed values for its properties, but it's surrounded by higher valued homes, there may be a property tax equalization factor involved.

The astute real estate investor that locates a neighborhood that they believe is about to "take off", may find that the tax authorities have a property tax equalization factor in place. This is there to bring the assessed values more in line with surrounding areas.

It's a simple calculation, in that there will be some assigned multiplier factor to apply to the properties. Assuming an area that the tax authorities believe is under-assessed in relation to surrounding areas, they might apply an equalization factor multiplier of 1.25 or a 25% increase.

Taking a $225,000 assessed property in this area,

Multiply $225,000 X 1.25 = $270,000 as the new assessed value