Market Value vs. Assessed Value: A Key to Your Appeal

When you begin a property tax appeal, you'll frequently encounter two terms: "market value" and "assessed value." While related, they are not interchangeable. Understanding the difference is fundamental to knowing if your property is over-taxed and building a strong case for an appeal.

What is Market Value?

Market value (or Fair Market Value) is the price your property would likely sell for on the open market. It's what a willing buyer would pay to a willing seller, with neither being under undue pressure.

• How it's determined: Market value is determined by the real estate market. It's influenced by recent sales of comparable properties, the location of your home, its condition, and current economic trends.
• Example: If you list your house and sell it for $300,000, that's its market value.

What is Assessed Value?

Assessed value is the value assigned to your property by the local government's assessor for the specific purpose of calculating property taxes.

• How it's determined: The assessor calculates this value, often using a mass appraisal system that analyzes sales data across neighborhoods. In many states, the assessed value is supposed to be a uniform percentage of the market value. For example, the assessed value might be set at 90% of the estimated market value.
• Example: Even if your home could sell for $300,000, the assessor might give it an assessed value of $270,000.

Why the Difference Matters for Your Appeal

The entire basis of most property tax appeals is arguing that the assessor's estimated market value is incorrect, which in turn makes your assessed value too high.

You are not arguing about the tax rate itself, but about the value your tax bill is based on. To win an appeal, you must provide evidence showing that the true market value of your property is lower than what the assessor has estimated.

This is why comparable sales are so critical. By showing that similar homes sold for less than your property's estimated market value, you provide direct proof that the assessment is likely inaccurate.

Disclaimer: This article provides general information and is not intended as legal or financial advice. Consult with a qualified professional for advice tailored to your situation.