What Is Assessed Value?

The dollar value assigned to a property by the local tax assessor for the purpose of calculating property taxes.

Detailed Explanation

Your assessed value is the number that actually appears on your tax bill. It is not necessarily what your home would sell for. In many states, the assessed value is a percentage of the market value, determined by the assessment ratio. In Texas or California, assessed value is supposed to equal market value, but in Ohio it is 35% of market value, and in Tennessee it is 25%. The county assessor's office is responsible for determining this number, typically using mass appraisal techniques that estimate the value of hundreds or thousands of properties at once rather than appraising each one individually. This is why errors happen. Mass appraisal models rely on recent sales data, property characteristics (square footage, lot size, age, condition), and neighborhood trends. If your property has unique features the model does not account for, or if the data in the county's records is wrong (for example, an incorrect square footage or bedroom count), your assessed value can end up too high. That is the foundation of most successful appeals: proving the assessed value does not accurately reflect your property's actual market value. A separate wrinkle worth understanding: some states calculate assessed value as the lower of two competing numbers rather than a straight percentage of market value. Oregon is the clearest example. Its Measure 50 system tracks a "maximum assessed value" that can grow at most 3% a year regardless of what the market is doing, and your taxable assessed value is whichever is lower, that capped figure or the current real market value. Crucially, unlike California's Prop 13, Oregon's cap does not reset when the property is sold, it carries over to the new owner. That single difference is why two nearly identical houses on the same Oregon street can carry assessed values tens of thousands of dollars apart depending purely on how long the current owner has held the property, a pattern Oregon's own Legislative Revenue Office has studied as a "horizontal inequity" built into the system.

How It Varies by State

Texas100% of market value

Assessed value should equal market value. Appraisal districts use mass appraisal with annual reassessment.

Ohio35% of market value

County auditor sets values. Reassessment every 6 years with triennial updates in between.

Tennessee25% of appraised value

Residential assessed at 25%. The appraised value is the county's estimate of market value.

California100% of purchase price (Prop 13)

Assessed value starts at purchase price and can increase no more than 2% per year, regardless of actual market appreciation. Resets to current market value when the property changes ownership.

OregonLesser of RMV or capped MAV (Measure 50)

Maximum assessed value grows at most 3% per year from a 1995-96 base, independent of market swings. Unlike California, this cap does NOT reset on sale, it transfers to the new owner.

Nevada35% of taxable value (uncapped)

Assessed value itself is not capped, it is simply 35% of taxable (replacement-cost) value. What IS capped separately is the final tax bill: NRS 361.4723 limits owner-occupied primary residences to 3% annual growth in taxes owed, and other residential property to up to 8%.

Common Misconceptions

Myth:Assessed value equals what my home is worth

Reality:In most states, assessed value is a fraction of market value. Even in states that assess at 100%, the county's estimate may differ significantly from what a buyer would actually pay.

Myth:My assessed value should go up every year with the market

Reality:Some states cap annual assessment increases. California limits increases to 2% per year under Prop 13. Florida's Save Our Homes caps homesteaded property at 3% per year.

Myth:A high assessed value means my home is worth more

Reality:An inflated assessed value means you are paying more in taxes than you should. It is not a compliment about your home's value.

Myth:Assessment caps like California's and Oregon's work the same way

Reality:Both limit annual growth, but California's Prop 13 base resets to full market value the moment a property changes hands. Oregon's Measure 50 cap does not reset on sale, it carries forward to the buyer, which is why two Oregon neighbors who bought at different times can have very different assessed values on nearly identical homes.

Impact on Your Tax Bill

In Illinois, where the assessment ratio is 33.33%, a home worth $300,000 should have an assessed value of $100,000. If the county has your assessed value at $115,000 (implying a $345,000 market value), you are overpaying. At Cook County's average effective rate of about 2.1%, that $15,000 overassessment costs you roughly $315 per year. In an assessment-cap state like Oregon, the calculus is different: your assessed value can be well below real market value simply because of the 3% annual cap, so a successful appeal there usually targets a data error or an unequal-appraisal argument rather than a straight market-value comparison, since the capped figure may already sit under market value.

Frequently Asked Questions

Why is my assessed value lower than what I paid for my house?

In assessment-cap states, this is normal and does not mean you are undertaxed. California's Prop 13 and Oregon's Measure 50 both limit how fast assessed value can grow year over year (2% and up to 3% respectively), so if your home has appreciated faster than the cap, your assessed value will trail your purchase price or current market value.

Can my assessed value go up even if my home's market value went down?

Yes, in capped states. If your assessed value has been sitting below the cap (common after a purchase or new construction), it can still rise by the statutory maximum even in a year the market softens, until it catches back up to the lower of market value or the cap.

Does assessed value reset when I buy a home?

It depends on the state. In California, assessed value resets to your purchase price at the time of sale. In Oregon, it does not, the prior owner's capped maximum assessed value carries over to you, then continues growing at up to 3% per year from that inherited base.

Is a mass-appraisal assessed value legally binding, or can I dispute the method itself?

The dollar figure is what determines your tax bill, but nearly every state's appeal process lets you challenge the underlying data (square footage, condition, comparable sales) that produced it. You are not stuck with a wrong mass-appraisal output just because it came from an automated model rather than an individual appraisal.

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