What does the term "highest and best use" signify in assessment?

The term "highest and best use" in property assessment refers to the most profitable legal use of a property that is physically possible, appropriately supported, and financially feasible. This concept is central to property valuation as it considers not just the current use, but also the potential for the property to generate the maximum return in value.

In determining highest and best use, assessors evaluate various factors including zoning regulations, physical characteristics of the land, market demand, and the economic conditions that affect the property's potential. This involves a comprehensive analysis that goes beyond looking only at property size or average market trends. For example, even if a property is large, if its current use does not yield the most profit according to market conditions, it may not represent its highest and best use.

By applying this principle, assessors can more accurately value properties, thus ensuring that assessments reflect true market value and support fair taxation.