&gt; Congratulations, you just defined &quot;fighting over scraps&quot;.<p>The difference in rents between a single family house and a multi-story apartment building is &quot;scraps&quot;?<p>Keep in mind that there is such a thing as market saturation. If there are already as many rental units in an area as their are prospective tenants, the value of land that &quot;could&quot; have an apartment building built on it is not anything like the value of the adjacent land that already has an apartment building on it, because actually building more apartment buildings would oversaturate the market and drive rents into the floor. So nobody will be willing to do that, even if the same person would spend even more money to buy one of the existing apartment buildings which doesn&#x27;t increase the local supply of rental units.<p>&gt; If you&#x27;re asking how it&#x27;s calculated, check the wikipedia page (the answer is multivariate analysis using property sales).<p>That&#x27;s... what? You can&#x27;t use property sales to calculate a tax which is supposed to devour the rent value of land. The sale price will have the tax built into it. If you have the tax calibrated correctly the sale price of an unimproved lot should be zero dollars and the sale price of a lot with a building should be only the value of the building.<p>And you couldn&#x27;t even calculate it using the fact that someone paying money for land indicates that it&#x27;s under-assessed, because if that was expected to work then no one would ever pay more than $0 as the value of unimproved land even if the current assessment was low, based on the expectation that the assessment will soon become accurate. But if no one is ever paying more than $0 as the value of unimproved land then what are you going to base your estimate on?