Understanding the Difference Between Assessed Value and Your Tax Rate

June 11, 2019 Property Taxes

The most common misconception we encounter at taxProper involves two key definitions in the property tax business: assessed value and tax rate. For many, the two concepts are interchangeable and homeowners think of them in the same way. But understanding the difference between the two is key to understanding a property tax appeal.

Assessed value is the value that the County Assessor values your home at. For residential properties, this value comes from a software program known as Computerized Mass Appraisal (CAMA). The Assessor reviews all of the different data points collected on homes and compares them to recently sold properties that have similar data points. In other words, a software automatically determines the value of your home every assessment cycle.

Taxes rates, on the other hand, are dependent on the policies of local governments. All of the local government units that have taxing authority individually decide how much money they want to raise through property taxes. This is known as the levy. The levies are then added up to get the total levy applied to the jurisdiction. Tax rates are determined through simple division, adding up the total value of all property and dividing it by levy.

A property tax appeal does not appeal the levy or the tax rate calculated — which are questions of governmental policy. Instead, a property tax appeal contests the assessed value determined by the Assessor. A well crafted appeal will provide compelling evidence that the value set by the Assessor is incorrect, and, if it is successful, the appeal reduces the assessed home value.

Because the property tax rate is applied to the assessed value of the home, a reduction in assessed value corresponds with a reduction in property taxes.