Market value vs Appraised Value For Property Taxes

Property taxes are a major cost of owning a home or real estate. But when tax bills go up, many people ask how do they set these values? What do terms like market value and appraised value mean? And which one affects your property taxes?

In this detailed guide, we break down these two terms, explain how they affect your tax bill, and show you what steps you can take if your property is overvalued.

What Is Market Value?

Market value is the price a willing buyer would pay for your property and a willing seller would accept, in an open and fair deal.

This value reflects:

  • Current demand in your area

  • Recent sales of similar homes

  • Economic trends

  • Location and neighborhood condition

Market value is not set by the government. Instead, it is based on how much your home could sell for today under normal conditions.

What Is Appraised Value?

Appraised value is a formal estimate of a property’s worth, made by a trained appraiser. This value may be used by banks for loans or by local governments for tax purposes.

It is based on:

  • Size and layout of your home

  • Lot size and condition

  • Features like garages, pools, or upgrades

  • Past sales data of similar properties

  • Building costs

In many states, the appraised value is used by the local tax office to set your property tax bill.

Key Differences: Market Value vs Appraised Value

Here's a clear side-by-side table comparing these two terms:


Feature - Market Value - Appraised Value

Who Sets It - Buyer & seller (market forces) - Licensed appraiser or tax office

Purpose - To sell or buy property - To set loan limits or property taxes

Based On - Demand, sales trends, buyer behavior - Home features, structure, recent appraisals

Frequency of Change - Can change often - Changes less often, updated yearly or every few years

Used for Property Taxes - Not always - Often used as tax base


How These Values Affect Your Property Tax Bill

Local governments use some form of appraised or assessed value to figure out your annual property tax. In many areas, this appraised value is not exactly the market value—but it is related.

Here’s how it often works:

  1. Appraised Value: A county assessor checks your property and gives it a value.

  2. Assessment Ratio: Some states apply a percentage (say 80%) to lower this value for tax purposes.

  3. Tax Rate (Millage Rate): This is the amount charged per $1,000 of value.

  4. Tax Bill: The final tax is calculated using the adjusted value and the rate.

Example:
If your home’s appraised value is $300,000, the state applies an 80% ratio, and the tax rate is 1.2%, then:

  • Taxable value = $300,000 × 0.80 = $240,000

  • Tax = $240,000 × 0.012 = $2,880

When Appraised Value Is Higher Than Market Value

This is a common concern. If your home’s appraised value is too high compared to its real market worth, you could be paying more in taxes than you should.

Possible causes:

  • Outdated appraisals

  • General increase in area values

  • Data errors about your home

  • No recent updates by the assessor

If this happens, you may be able to appeal the value.

How to Appeal an Appraised Value

Most counties have a formal appeal process. You can request a review or hearing where you present facts to support a lower value.

Steps to Appeal:

  1. Check Your Property Record
    Visit your county assessor’s site. Look for details like square footage, year built, or features. Correct any mistakes.

  2. Gather Evidence

    • Recent sale prices of similar homes

    • Photos showing wear and tear

    • A private appraisal from a licensed appraiser

  3. File the Appeal
    Meet deadlines and provide clear, written proof. Some counties let you file online or by mail.

  4. Attend the Hearing (if needed)
    Explain your position calmly. Show your proof.

Should You Get a Private Appraisal?

If your property taxes seem too high, a private appraisal may be worth it. A professional appraiser can give a clear, updated value based on facts not just public records.

This can help during appeals or when buying or selling.

Need help reviewing your property tax bill? Our team at Zuazo & Associates is here to help. We offer tax review services and support for property tax questions.

When Market and Appraised Values Are Close

In some counties, the appraised value is nearly equal to the market value. This is often the case in states where properties are assessed at full value. It’s important to know your state’s rules.

Visit your local tax assessor's office or website to check:

  • How often values are updated

  • Whether they assess at full market value or a fraction

  • Whether there are exemptions or caps on increases

Common Misconceptions

Myth or Truth?

Myth: “Appraised value is always higher than market value" Truth: It depends sometimes it is lower, especially in down markets

Myth: “I can't do anything about my tax bill” Truth: You can appeal an unfair value or apply for exemptions

Myth: “Tax assessors always visit my property” Truth: Often they use public records or software estimates

Final Thoughts

Understanding the difference between market value and appraised value can save you money and help you avoid surprise tax bills.

Whether you’re buying, selling, or just managing your home costs knowing how values are set and used can make a big difference.

If you believe your tax value is too high, take action. Check your records, gather proof, and start the appeal if needed.

Need Professional Help?

At Zuazo & Associates, we guide homeowners, investors, and businesses through tax reviews, appraisals, and appeals. Contact us today for personalized support:

Visit our Resource Center.
Read more on our Blog.