Tax Assessed Value vs Market Value: Why They Are Different Numbers
TL;DR
Your tax assessed value and your home's market value are almost never the same number. Market value is what a buyer would pay on the open market. Assessed value is the number the county uses to calculate your tax bill. In many states, assessed value is a percentage of market value (50%, 33%, 10%, depending on the state). In states that assess at 100%, the assessed value may still lag behind or exceed actual market value because assessments are only updated periodically. When your assessed value is higher than the market supports, you are overpaying.
What Is Market Value?
Market value is the price a willing buyer would pay and a willing seller would accept in an arm's-length transaction. It is determined by supply and demand, location, property condition, and comparable sales. Market value changes constantly with market conditions.
What Is Assessed Value?
Assessed value is the dollar figure your county assessor assigns to your property for tax purposes. In some states, it equals the full estimated market value. In others, it is a fraction:
| State | Assessment Ratio | $300K Home Assessed At |
|---|---|---|
| California, Florida, NY (outside NYC) | 100% | $300,000 |
| Ohio | 35% | $105,000 |
| Georgia | 40% | $120,000 |
| South Carolina (owner-occupied) | 4% | $12,000 |
| Louisiana | 10% | $30,000 |
| Colorado | ~6.7% | ~$20,100 |
Why They Differ
- Assessment ratios: Many states intentionally set assessed value below market value using a fixed ratio
- Assessment caps: States like California (2% annual cap) and Florida (3% cap) limit how fast assessed values can grow, so they fall behind in rising markets
- Assessment lag: Counties reassess on schedules of 2-10 years. Between reassessments, values can drift away from actual market conditions
- Different methods: The assessor may use different comparable sales, different adjustments, or outdated data
- Mass appraisal limitations: Assessors value thousands of properties at once, which introduces more error than an individual appraisal
When to Worry
The gap between assessed value and market value only matters in one direction: when your assessed value is higher than it should be. If your assessed value is below market, you are getting a favorable deal. If it is above market, you are overpaying.
Compare your assessed value (adjusted for your state's assessment ratio) to what comparable homes are selling for. If comparable homes sell for $280,000 and your assessment implies a market value of $320,000, you have a case for an appeal.
Our free property tax analyzer does this comparison automatically, adjusting for your state's assessment ratio and comparing to real sales data.
Frequently Asked Questions
How do they compare in terms of tax assessed value vs market value: why they are different numbers?
Your tax assessed value and your home's market value are almost never the same number. Market value is what a buyer would pay on the open market. Assessed value is the number the county uses to calculate your tax bill.
What Is Market Value??
Market value is the price a willing buyer would pay and a willing seller would accept in an arm's-length transaction. It is determined by supply and demand, location, property condition, and comparable sales. Market value changes constantly with market conditions.
What Is Assessed Value??
Assessed value is the dollar figure your county assessor assigns to your property for tax purposes. In some states, it equals the full estimated market value. In others, it is a fraction:
When to Worry?
The gap between assessed value and market value only matters in one direction: when your assessed value is higher than it should be. If your assessed value is below market, you are getting a favorable deal. If it is above market, you are overpaying.