Why Doesn’t Your Tax Bill Match Your Home’s Price?

Oct 28 2026

You’ll see a lot of numbers when you buy a home. There’s the price you agree to pay. There’s the number on your appraisal. Then your first property tax bill shows up with a “value” that may look nothing like either one.

That’s because your home has more than one value. The two you’ll hear about most are market value and assessed value.

Market value is what your home could sell for. Assessed value is the number your local government uses to figure out your property taxes. They’re often very different, and that’s normal.

Here’s what each one means, why they don’t match, and what to do if your assessed value looks wrong.

 

What Is Market Value?

Market value is the price your home would likely sell for today, between a buyer and seller who both know the facts and aren’t under pressure to make a deal.

No one sets market value. The market does. It’s shaped by things like:

  • Location – The neighborhood, schools, and nearby amenities.
  • The home itself – Size, age, condition, and updates.
  • Recent sales – What similar homes nearby have sold for. These are often called “comps.”
  • The local market – How many buyers and homes for sale there are right now.

Market value changes all the time. The home value estimates you see on real estate websites are guesses at market value.

 

What Is Assessed Value?

Assessed value is the value your local assessor puts on your home for tax purposes. (An assessor is a local government official, usually at the county, city, or town level.) It’s the starting point for your property tax bill.

How the assessed value is set depends on where you live. Your state may:

  • Use full market value – Some states aim for assessed value to match market value.
  • Use a set percentage of market value – In Georgia, for example, homes are assessed at 40% of fair market value.
  • Use your purchase price – In California, your assessed value starts at what you paid and can only rise slowly after that.

Assessed value isn’t a judgment of what your home could sell for. It’s a number built for one job: dividing up the local tax bill fairly among property owners.

 

A Third Number: Appraised Value

When you buy a home with a mortgage, your lender orders an appraisal. A licensed appraiser visits the home and estimates its market value. The lender uses that number to make sure the home is worth what you’re borrowing.

An appraisal is a one-time estimate of market value for your loan. It’s not used to set your property taxes.

 

Value

Who Sets It

What It’s Used For

How Often It Changes

Where You’ll See It

Market value

Buyers and sellers
Pricing, selling, and home equity
All the time
Listings, sale prices, online estimates

Assessed value

Your local assessor
Property taxes
On your area’s schedule, often every year or every few years
Your assessment notice or tax bill

Appraised value

A licensed appraiser hired through your lender
Approving your mortgage
When you buy or refinance
The appraisal report from your lender

 

Why Don’t the Two Numbers Match?

It’s common for your assessed value to be lower, or sometimes higher, than what your home is worth. Here are four reasons why.

1. Your State May Only Count Part of the Value

Some states assess homes at a fixed share of market value. This share is called the assessment ratio.

In Georgia, it’s 40%. So a home with a market value of $300,000 has an assessed value of $120,000. Georgia tax bills show both numbers.

A lower assessed value doesn’t automatically mean lower taxes. Local tax rates are set with the assessment ratio in mind.

 

2. Assessments Can Lag Behind the Market

Assessors value every home in the area on a schedule. Some update every year. Others go several years between updates.

When home prices rise fast, assessed values may not catch up right away. When prices fall, your assessed value may stay higher than market value for a while.

 

3. Some States Limit How Fast It Can Rise

Some states cap how much assessed value can go up each year, even when market value jumps.

In California, your purchase price becomes your home’s starting value for taxes. After that, it can rise no more than 2% a year until the home is sold or you add new construction. Florida also limits yearly increases for homes that get its homestead exemption.

Why this matters when you buy: In states like these, the assessed value often resets when a home sells. The seller may have paid taxes on a value set years ago. Yours will likely be based on what you paid. California even sends new owners an extra “supplemental” tax bill to cover the change.

 

4. Exemptions Lower the Value That’s Taxed

An exemption removes part of your home’s value from taxes. The most common one for homeowners is the homestead exemption, for the home you live in as your main residence.

Amounts vary a lot by state. For example:

  • California – Takes $7,000 off the taxable value of an owner-occupied home.
  • Florida – Takes $25,000 off for all property taxes, plus another $25,000 off for non-school taxes.

You usually have to apply for these. They aren’t always automatic.

 

Keep in mind: Property tax rules are changing in several states. On November 3, 2026, voters in seven states will decide on property tax measures, including some that would raise homestead exemptions. Check with your local assessor for the rules where you live.

 

Real-World Examples

 

Same Home, Two Different Numbers

Danielle buys her first home in Georgia for $300,000.

When her tax bill arrives, it lists an assessed value of $120,000. At first she thinks it’s a mistake. Then she learns that Georgia assesses homes at 40% of market value. Both numbers are correct.

The Seller's Tax Bill Isn't Your Tax Bill

Mike and Penny are buying a home in California for $650,000. The seller bought it in 2010 for $350,000.

Because California limits increases to 2% a year, the seller’s assessed value is now about $480,000. Once Mike and Priya buy, it resets to their purchase price of $650,000.

California’s base tax rate is 1%. So their base tax goes from about $4,800 to $6,500 a year, before any local add-ons. Their lender estimated taxes on the purchase price, not the seller’s old bill, so they weren’t caught off guard.

Catching a Mistake

Rosa’s first assessment notice lists her home with four bedrooms. It only has three.

She calls her assessor’s office and sends photos and her closing papers. The office fixes the record and lowers her assessed value before her next tax bill.

 

How Can You Check Your Assessed Value?

You don’t need to be an expert to make sure your assessed value is fair. Here are a few helpful steps.

  1. Ask Before You Buy – Ask your lender or agent to estimate your taxes based on your purchase price, not the seller’s current bill. That number can be very different.
  2. Find Your Assessment Notice – Your assessor’s office mails it, and many counties also let you look up your home online. Look for the market value, the assessed value, and any exemptions.
  3. Check the Facts – Make sure the square footage, number of bedrooms and bathrooms, and lot size are correct. Simple errors can raise your value.
  4. Compare With Similar Homes – Look at what similar homes nearby sold for. If your state uses an assessment ratio, multiply first so you’re comparing apples to apples.
  5. Apply for Your Homestead Exemption – Ask your assessor’s office what you qualify for and when the deadline is. Many exemptions aren’t automatic.
  6. Know Your Appeal Deadline – If your value looks too high, start by calling the assessor’s office. If that doesn’t fix it, you can usually file a formal appeal. Filing windows are often short, so mark the date.
  7. Get Support – A housing counselor can help you understand your notice and plan for your taxes.

Frequently Asked Questions About Market Value and Assessed Value

Is assessed value the same as market value?

Not usually. Market value is what your home could sell for. Assessed value is what your local government uses to figure your property taxes. Depending on your state, it may be a share of market value, based on your purchase price, or behind the market.

Is assessed value the same as appraised value?

No. An appraisal is ordered by your lender when you buy or refinance. It estimates market value for your loan. Assessed value is set by your local assessor for taxes.

Is a low assessed value a bad sign?

No. A low assessed value doesn't mean your home is worth less. In many states, assessed value is supposed to be lower than market value.

Will my assessed value change when I buy a home?

It might. In states that limit yearly increases, like California, the assessed value often resets to your purchase price. Ask your lender to estimate your taxes on what you're paying, not on the seller's bill.

How often is assessed value updated?

It depends on where you live. Some areas update every year. Others go several years between updates. Your assessor's office can tell you the schedule.

Can I appeal my assessed value?

Yes. Start by talking with your assessor's office. If that doesn't resolve it, you can usually file a formal appeal. Deadlines are often short, so check the date on your notice.

Does my assessed value affect what I can sell my home for?

No. Buyers and lenders look at market value and appraisals, not your tax assessment.

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