Assessed value vs. market value: what your tax notice means
Assessed value is assigned for property taxation. Market value estimates what a home would sell for on the open market. The two numbers can match or differ under local rules, so a difference alone does not mean your assessment is wrong. Start with the exact value label and valuation date on your tax notice before comparing it with a sale price or online estimate. The California State Board of Equalization's explanation distinguishes assessed value from market value; Texas uses the term appraised value on its tax notice.
What does each value tell you?
| Value or notice term | What it is used for | Who assigns or estimates it |
|---|---|---|
| Assessed value | A value assigned for property taxation; its relationship to market value depends on local law. | The local assessment office. |
| Market value | An estimate of the price a property would bring in an open-market sale under the applicable conditions. | An assessment office may estimate it for tax purposes; a sale price or another estimate may provide a separate point of comparison. |
| Appraised value (Texas notice) | The appraisal district's value for tax purposes. It is not, simply because of its name, an appraisal ordered by a mortgage lender. | The local appraisal district. |
| Taxable value (Texas notice) | The value used to calculate tax after applicable exemptions. It can differ by taxing unit. | Shown in the appraisal district's notice information as specified by Texas law. |
These labels do not mean every state calculates tax the same way. California's assessment guide explains its assessed-value system. The Texas Comptroller says a Texas notice lists the current year's appraised value, the preceding year's taxable value and approved exemptions, among other items. Read each year's label before comparing amounts.
Which value and date should you compare?
Check your notice for its assessment year, the date the property is valued, the property's recorded details and the exact value you want reviewed. This identifies the figure and time period your evidence must address. A current asking price or online estimate may describe a different date; it is not automatically evidence of the value on the tax valuation date.
Texas example: With few exceptions, Texas appraisal districts value taxable property at market value as of January 1. A Texas Notice of Appraised Value reports the current year's appraised value along with other information, including approved exemptions and the prior year's taxable value. Match the year and field you are questioning before comparing a sale price. These are Texas rules, not a national valuation date or notice format. Source: Texas Comptroller.
Superior, Wisconsin example: A tax bill's Estimated Fair Market Value is calculated using the property's assessed value and an average assessment ratio. Superior says this figure is an approximate check on the assessment, not a separate inspection or individual value estimate for that home by the Wisconsin Department of Revenue. The city says assessed value, rather than this bill estimate, is used to calculate its property taxes. This example does not supply a formula for other places. Source: City of Superior.
Why might a similar home have a different assessment?
A neighbor's lower assessment may reflect a legal difference rather than an error in yours. California example: A base year value is the market value established when ownership changes or new construction is completed, unless an exclusion from reassessment applies. California adjusts that base value for inflation each year, generally by no more than 2 percent. Homes bought at different times can therefore have different assessed values even when they look alike and have similar current market values. For an addition, only the newly built portion is assessed at market value and added to the existing assessment. An exclusion may prevent reassessment after a qualifying ownership change. Source: California State Board of Equalization.
California's 2 percent rule is not a national rule or a cap on every annual tax bill. A home with a temporary decline-in-value assessment has been assessed below its factored base year value, meaning its base year value after annual adjustments. As its market value recovers, that assessed value can rise by more than 2 percent in a year without exceeding the factored base year value, absent a change in ownership or new construction. California tax bills can also include charges beyond taxes based on assessed value. Source: California State Board of Equalization.
What evidence can help you check the value?
Sales of similar homes can help test a market-value estimate. Start with sale dates near the applicable valuation date, then compare features that affect price, such as size, age and location. A comparable sale is a sale used to compare another property with yours; relevant differences need to be considered rather than ignored. Texas describes a sales-comparison approach that uses recent sales of similar properties and adjusts for differences. A lower sale price, by itself, does not prove your assessment is wrong. Source: Texas Comptroller.
Keep the notice and check the current instructions from the office that handles assessment reviews where your property is located. That office's instructions, not a general article, determine the applicable evidence rules and filing deadline. The property tax guides can help you find a local starting point; a directory listing does not establish that a filing window is open.
When should you ask for a local review?
- Verify the recorded property facts on your notice or assessment record. An incorrect description can affect the value being reviewed.
- Compare the right figure at the right date. Use the notice's value label and valuation date to decide whether your evidence addresses the assessment rather than a later market change.
- Check the official review office and deadline. Follow its current instructions if you want a review. The assessment-review deadline is a separate question from when a property tax payment is due. In California, the Board of Equalization describes contacting the County Assessor for an informal review or filing a formal assessment appeal through the County Clerk of the Board's office; procedures elsewhere differ. Source: California State Board of Equalization.
After finding your local assessment guide, you can consider TaxSauce for value analysis, evidence organization and packet preparation. You review the work and choose what to submit.
Frequently asked questions
Why is my assessed value below market value?
Local rules may produce that result. In California, an adjusted base year value can remain below current market value when a home's market value has risen since its base year was established. Check your own jurisdiction's rules before treating the difference as an error. Source: California State Board of Equalization.
Can my neighbor have a different assessment?
Yes. For example, California homes purchased at different times can have different base year values and assessments even if they are similar today. A neighbor's number alone does not establish which value is right for your home. Source: California State Board of Equalization.
Does a lower sale price automatically prove my assessment is wrong?
No. Check when the sale occurred, how similar the property is to yours, and whether local law calls for a direct comparison with market value. Texas's sales-comparison approach accounts for differences between properties; your local review office sets its evidence instructions. Source: Texas Comptroller.