Appraised Value vs Tax Assessment: What's the Difference for Homeowners?

As a homeowner, you may have heard of two terms that are often used interchangeably - appraised value and tax assessment. While both terms refer to the value of your property, they are actually two different things. In this blog post, we'll explore the differences between appraised value and tax assessment, and what they mean for you as a homeowner.

Appraised Value

The appraised value of a property is the estimated market value of the property, determined by a professional appraiser. This value is typically based on a number of factors, such as the size and location of the property, the condition of the property, and recent sales of similar properties in the area. The appraised value is usually used by lenders to determine the amount of a mortgage loan and is also used in the sale of a property.

Tax Assessment

A tax assessment, on the other hand, is the value that is assigned to your property by your local government for tax purposes. This value is used to determine the amount of property taxes that you will owe each year. Tax assessments are typically done by a government assessor, and are based on a number of factors, including the size and location of the property, the age and condition of the property, and the local real estate market.

Differences Between Appraised Value and Tax Assessment

The main difference between appraised value and tax assessment is their purpose. Appraised value is used primarily in the sale of a property and by lenders to determine the amount of a mortgage loan. Tax assessment, on the other hand, is used to determine the amount of property taxes that you will owe each year.

Another difference between the two is the frequency at which they are done. An appraised value is typically done once when a property is being sold or refinanced, whereas tax assessments are typically done annually or bi-annually by your local government.

Finally, the methods used to determine appraised value and tax assessment can also differ. An appraiser may use different valuation methods to determine the value of a property, whereas tax assessments are often based on a standardized formula used by the government.

No homeowner wants to pay more taxes than necessary, and the differences between appraised value and tax assessment can be confusing. Knowing how these two values are determined—and what each of them means for your property's worth—allows you to maximize the return on your investment while ensuring appropriate payment of any applicable fees or levies.