What is Tax Value versus Market Value?

Dated: July 14 2021

Views: 58

I often get asked by sellers if the tax value is a good indicator of what they could sell their house for.  Here is the difference between tax value and market value:

1)  Tax Value

This the value the county in which you reside in uses to assess your taxes. It is not uncommon for the tax value to increase on a yearly basis by a certain percentage. In most cases, the tax value is always lower than the market value of a home.

The county typically uses a ratio of 80% to 90% of the market value to assess the tax value.  From here, the county will deduct exemptions the homeowner qualifies for. Exemptions will reduce the value by a percentage, allowing you to decrease your property taxes. 

Remember that the tax value determines what you will pay in property taxes. You want this value to be low.

2)  Market Value

Market value is the most probable price a property will bring in the current market. In other words, market value is the price a buyer is willing to pay for a property, and the price a seller is willing to sell for.

Many factors play a role in figuring the market value. Agents and appraisers will gather similar comparable sold homes and will look at what they sold for. Both the agent and the appraiser will take into consideration the following:

  • External characteristics: Curb appeal, exterior condition of the home, lot size, home style, availability of public utilities.
  • Internal characteristics: Size and number of rooms, construction and appliance quality and condition, heating systems, and energy efficiency.
  • Comps, or comparablesWhat similar homes in the same area have sold for recently.
  • Supply and demand: The number of buyers and the number of sellers in your area.
  • Location: How desirable is the neighborhood? Are the schools good?

In today’s market, the value of a home has increased significantly due to low inventory.
It is always a good practice to have a realtor conduct a current market analysis to determine a current selling price. Keep in mind that a lower tax value does not mean your home is worth less; it just means you pay less in taxes.

I would love to hear from you.  You can send me your questions via the comment section and I will get back to you.

Janet Wingrove has been a licensed realtor in the State of Texas since 2007 and has been selling real estate in San Antonio ever since. "My #1 goal is to help you achieve your real estate dreams!" - Janet

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