What Is Appraised Value
Appraised value is the official assessment of your property's worth as determined by your local assessor's office. This figure forms the basis for your property tax bill. If your property is assessed at $250,000 and your local tax rate is 1.2%, you owe $3,000 annually. The appraised value directly determines what you pay.
How Assessors Determine Appraised Value
Most jurisdictions use one of three appraisal methods. The cost approach adds construction costs and land value, then subtracts depreciation. The income approach applies to rental properties, dividing annual net income by a capitalization rate. The sales comparison approach, most common for residential properties, examines recent sales of similar homes in your area.
Your assessor pulls comparable sales (comps) from the last 6 to 12 months. They adjust for differences like square footage, lot size, condition, and age. A comp that sold for $200,000 might be adjusted to $210,000 if it has an extra bedroom. The assessor uses multiple comps to estimate your property's value, typically targeting an assessment ratio between 85% and 100% of fair market value.
Key Distinction for Appeals
Appraised value and fair market value should be close, but they often diverge. Fair market value reflects what a willing buyer would pay today. Appraised value may lag behind market shifts by 12 to 18 months because assessments happen on a cycle, not continuously. In declining markets, your appraised value might overstate what your home is actually worth. This is your strongest argument in a board of review hearing.
Assessment Ratios and Exemptions
Assessment ratios vary by state and property type. Commercial properties in some jurisdictions are assessed at 60% of fair market value, while residential properties are assessed at 90%. Your county assessor's office publishes these rates publicly. If your appraised value exceeds the proper ratio, you have grounds for an appeal.
Certain properties qualify for exemptions that reduce or eliminate tax liability. Agricultural land, primary residences, veteran properties, and nonprofit organizations may qualify. Exemptions directly reduce appraised value or the tax owed on that value. If you haven't claimed an applicable exemption, file immediately with your assessor's office, not the board of review.
Challenging Appraised-Value at Board of Review
Most jurisdictions allow one formal appeal to the board of review. Deadlines are typically 30 to 45 days after your assessment notice arrives. You'll need an appraisal report showing lower value, recent appraisals from similar homes, evidence of property defects not reflected in the assessment, or proof that your home sold below its appraised value within the last year.
Bring comparable sales data showing lower values, photos documenting deferred maintenance, or a professional appraisal. The board reviews your evidence against the assessor's methodology. If the board agrees your appraised value is too high, they'll reduce it retroactively to the assessment date, lowering your current and future tax bills.
Common Questions
- Can I appeal my appraised value if I disagree with the assessment? Yes, nearly every jurisdiction has a formal appeal process to the board of review or county assessor's office. Deadlines vary, typically 30 to 45 days from your assessment notice. You'll need evidence like recent comparable sales, a professional appraisal, or documentation of property defects the assessor missed.
- What's the difference between appraised value and what I could sell my house for? Appraised value is the assessor's estimate for tax purposes. Fair market value is what a buyer will actually pay. In slow markets, your appraised value may exceed fair market value by 10 to 20%, which strengthens an appeal if you have recent sales data showing lower prices.
- How often does the assessor update appraised value? Most jurisdictions reassess every 1 to 4 years, though some assess annually. After a reassessment, you typically have 30 to 45 days to file an appeal. If you made significant home improvements, the assessor may adjust your value upward between reassessment cycles.