Redefining “Highest and Best Use”

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farmland photo by Henri DikiHighest and best use is a concept in real estate appraisals. It states that the tax or sale value of a property is directly related to the use of that property; the “highest and best use” is the reasonably probable use that produces the highest property value. This use, the Highest and Best Use, may or may not be the current use of the property. But there is an attempt to recover that potential value in a sale or tax valuation as if it were. So even a landlord who is renting below the potential rent, she is stilled taxed at the most probably rent given the available information. Or a farmer is taxed for the “highest and best” value, which is the zoned value for typically something like commercial buildings. (more…)

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