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When dealing with property taxes and valuations, it's important to understand the distinction between market value and appraised value—two terms that are often confused but serve different purposes in the property assessment process.
Market Value: Valuing your home based on sales
Market value represents what your home could reasonably sell for in the current real estate market. This value is determined based on comparable property sales in your neighborhood or market area. The District examines recent transactions of similar properties to establish what buyers are willing to pay for homes like yours under normal market conditions.
In essence, market value answers the question: "What could this property sell for today?"
Appraised Value: The value of your home based on you
Appraised value, on the other hand, is derived from the market value but includes adjustments for any exemptions the property may qualify for. These exemptions might include homestead exemptions, disability exemptions, veteran exemptions, or other reductions provided by law.
The formula is simple: Appraised Value = Market Value - Applicable Exemptions
This appraised value is what ultimately determines your property tax liability, not the market value alone.
Understanding this distinction can be crucial when protesting your property taxes, as you'll need to focus on challenging the market value determination rather than the exemptions that are applied afterward.
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This article is for informational purposes only and does not constitute legal or tax advice.
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