Each year, property owners receive a Notice of Appraised Value from the appraisal district. One of the most important pieces of information on that notice is the assessed value. While it may look similar to market value, it serves a very different purpose—and understanding it can help you better manage your property taxes.
Market Value vs Assessed Value: What’s the Difference?
- Market Value is the appraisal district’s estimate of what your property would sell for on the open market as of January 1.
- Assessed Value is the value used to calculate your property taxes after exemptions and legal limitations are applied.
Market value can rise or fall each year based on sales activity, economic conditions, or neighborhood trends. Assessed value, however, is often more stable—especially if you qualify for certain exemptions.
Why the Assessed Value Matters More for Taxes
Your property taxes are calculated using the assessed value, not the market value. This means:
- Even if your market value increases significantly, your taxable value may not rise by the same amount.
- Exemptions and caps applied to your property directly affect the assessed value, which can help limit tax increases.
In short, the assessed value is the number that matters most when it comes to what you actually pay in property taxes.
How the Homestead Cap Helps
If your property qualifies for a General Homestead Exemption, state law provides an important protection:
- The assessed value of your residence homestead may not increase by more than 10% per year, plus the value of any new improvements.
- This cap applies even if the market value increases by more than 10%.
For example, if home prices rise sharply in your area, your market value may reflect that increase—but your assessed value will be limited, helping to keep your property taxes more predictable over time.
What Can Cause the Assessed Value to Increase More Than 10%?
The 10% cap applies only to existing value. Certain changes can add new value, which is not subject to the cap, such as:
- Adding a room or garage
- Building a new structure (like a workshop or pool)
- Major renovations that increase living area or functionality
When new improvements are made, that added value is included in the assessed value in addition to the capped increase.
Why You Should Review Your Notice Carefully
Your Notice of Appraised Value shows:
- Market value
- Assessed value
- Exemptions applied
- Taxable value
Reviewing this information each year helps ensure:
- Your exemptions are correctly applied
- The assessed value reflects applicable caps
- Any changes to your property are accurately represented
If something doesn’t look right, property owners have the right to ask questions or file a protest within the deadline listed on the notice.
Key Takeaway
The assessed value on your Notice of Appraised Value is important because:
- It is the value used to calculate your property taxes
- It reflects exemptions and legal limits that protect property owners
- It can help reduce the impact of rising market values
- It provides predictability and transparency in the property tax system
Understanding how assessed value works allows property owners to make informed decisions and ensures confidence in the appraisal process.
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