Assessed Value vs Market Value: What’s the Difference?

Tax Assessed Value vs. Market Value: What’s the Difference?

The start of a new year often means property taxes are due for homeowners. But how do cities and counties determine your taxes? Property taxes are based on the tax assessed value of your property—not what you paid for it or what you could sell it for. Typically, the tax assessed value is lower (sometimes significantly) than the market value of your home. Let’s explore the difference.

Market Value
The market value of your home is the price a buyer is willing to pay for it. Real estate agents consider various factors when determining this value, including:

• External Characteristics: Curb appeal, condition, architectural style, and lot size.

• Internal Characteristics: Square footage, number of rooms, condition, and finishes.

• Comparable Sales: Recent sale prices of similar homes in your area (known as “comps”).

• Supply and Demand: The number of homes for sale compared to the number of active buyers.

• Location: Proximity to amenities, schools, and desirable neighborhoods.

Assessed Value
The assessed value is determined by local governments for tax purposes. An assessor evaluates your property by considering:

• Recent sales of similar properties in your area.

• The size and condition of your home.

• Replacement costs if the property were destroyed by fire or natural disaster.

The assessor then applies a millage rate—a numerical multiplier representing a dollar amount per $1,000 of assessed value—to calculate your property taxes. For more information, visit the Lafayette County Tax Assessor's website or the City of Oxford Tax Assessor's website.

Bottom Line
Don’t be alarmed if your home’s assessed value is lower than its purchase price. A lower assessed value means lower property taxes. Buyers and sellers, however, focus on market value when determining a home’s worth.

For more insights, check out this Realtor.com article comparing market value and assessed value.