Assessed value is the dollar figure your local tax assessor assigns to a property, and it is the number your property tax bill is calculated from. It is set by a government office on its own schedule, so it often lags behind, and sometimes diverges sharply from, what the property would actually sell for on the open market.
In practice
Assessed value usually starts from an estimated market value and then applies an assessment ratio set by your county or state. Say the assessor estimates a duplex is worth $300,000 and your county assesses residential property at 80% of that estimate. The assessed value is $300,000 × 0.80, which is $240,000. Your tax bill then comes from the mill rate, or tax rate, applied to that assessed value. At a rate of 1.5%, the annual property tax is $240,000 × 0.015, which is $3,600.
The gap matters. If you actually paid $360,000 for that duplex but the assessor is still working from a $300,000 estimate, your tax bill is built on a number $60,000 below your purchase price. The reverse happens too: assessors sometimes carry a value above what a unit would sell for in a softening area, and that is the case worth appealing. Appeal windows are short and the deadline is printed on your assessment notice, so the date is the thing to put on a reminder the moment that notice arrives.
Why it matters to a small landlord
Property tax is one of the larger line items you cannot negotiate away, so the assessed value behind it feeds straight into your returns. It is a real piece of your operating expenses, which means an inflated assessment quietly drags down your net operating income and your cap rate for as long as you own the property. When you underwrite a purchase, pull the current assessed value and the rate, then model what the bill becomes after a reassessment at your purchase price, because many jurisdictions reset the value at the next sale. If the notice that arrives looks too high, you appeal it with evidence, and the strongest evidence is a set of recent comparable sales, the same kind of work that goes into a comparative market analysis. Assessment methods and appeal deadlines vary by locality, so read the procedure your assessor publishes rather than assuming the rules from another county.
Do not confuse assessed value with an appraisal, which a lender orders to decide what it will lend, or with the market value a comparative market analysis estimates from active and sold listings. All three answer different questions about the same property, and the assessor's number is the one that sets your tax, year after year, until you challenge it.