Market Value

Market Value

For the purpose of assessment and taxation, the City of St. John’s must determine the market value of all properties within the City as of a single date, known as the base date. The base date for the 2022 assessments notices is January 1, 2020.
 
Market Value is the most probable price which would be paid, as of the base date, for a property that has been exposed in a competitive market with a buyer and seller each acting prudently, knowledgeably and for self-interest, assuming that neither is under duress.
 
This market value is a retrospective (historical) value, not the current value. When reviewing your assessment notice it is important to remember that value stated on the assessment notice is the market value as of January 1, 2020 not what the property is worth today.
 
To determine the market value an assessor will use a combination of three different approaches, which are outlined below:

  1. The Direct Comparison Approach - This is the most commonly known valuation approach. Sales of comparable properties that occurred near or on the base date are analyzed to determine the market value of a property. In considering any sales evidence, we ensure that the property sold has a similar use as the property to be valued.
  2. The Income Approach - An income-producing property’s ability to earn revenue is directly tied to its market value. When using the income approach, a detailed analysis of a property's income and expenses is completed and then compared to similar properties to determine how much income a property could be expected to generate.We then analyze the relationship between incomes and sale prices to calculate the capitalization rate (cap rate) for the property by dividing the income by the sale price.
  3. The Cost Approach – The cost as of the base date to replacing buildings, structures or other taxable components on the land are calculated. A deduction for depreciation due to age, functional or economic conditions that could impact the value of the property is then applied to the replacement cost estimate to determine the depreciated replacement cost. The value of the land, as of the base date, is then determined and added to the depreciated replacement cost to produce an overall estimate of market value.