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Property Tax Assessments vs Appraisals: A Breakdown

As a continuation of our property tax breakdown series, we will discuss assessments as compared to appraisals. A subject property’s tax bill is calculated by multiplying the assessed value (minus exemptions, which we will discuss in our next breakdown series in February) by the property tax rate. First, it’s important to know there are a few factors that will determine your subject property’s assessed value. The size of the property, the type and age of construction, as well as the location are all considered in assessment determination. In addition, the classification of the subject property also effects the final assessment. The most common property classifications are residential, agricultural, commercial, and industrial with other options existing (vacant, etc.). The tax applied to your subject property is based on its classification. There is no uniformity in tax rates across classifications.

An appraisal, while comparable to an assessment in that both project value, differs because it is figuring the tangible value of your home; that is to say, the subject property’s current market value. A subject property appraisal is conducted by a state-licensed appraiser. As the current market value is directly impacted by the appraisal, the process is much more in-depth than the state’s assessment process. There are several factors that will determine your subject property’s appraised value, such as total square footage, structural improvements/renovations, number of bedrooms, foundation, etc. In addition, the appraisal process takes into consideration the value of comparable homes in a specified area/neighborhood.

It can be confusing understanding the difference as both processes are determining subject property value. Essentially, the difference between an assessment and an appraisal comes down to how said value is determined, and for what purpose. The assessment process is used for the state to determine the relative value of your subject property for taxation. The appraisal process is used to determine the actual market value of your subject property (in preparation for sale, refinance, etc.). It’s always good to ask questions about these details, so let us know if we can be of any help as you reach your potential.


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