Property Tax Assessment Value Versus Market Value

Blue house with dollar sign patternQ: We just received our Annual Notice of Assessment from our county tax collector. The current value has remained the same as last year on the notice. But if you dig a little deeper online, you can see that the “building value” decreased by $34,000 and the “land value” increased by $34,000.

My question is how will that affect my property and my ability to sell my property in the future? I assume this is what causes “in-fill”. My house was built in 1964, but is in very good condition.

A: Local county governments are so desperate for revenue: Property values keep falling and more homeowners are challenging their property tax assessments. If everyone gets a break, the county government and other taxing bodies will see a reduction in their revenue and could run out of money.

What seems to be happening is that counties across America are getting creative with how they assess property. In your case, your net value is the same, but the county has recognized that your building has fallen in value (by $34,000) and the land has mysteriously increased in value by the exact same amount.

Tah-dah! You may now have the exact same property tax bill, or perhaps one that is higher, if your county has raised the tax rates.

It’s ridiculous to think that your land value has gone up this year but the building has decreased in value, unless you live in a few blessed counties across the country. In most places, property values fell again this by almost every other measure. You should consider fighting the current valuation.

To answer your question, it’s really hard to know how this might affect your ability to sell your property in the future. No one likes to pay high property taxes, but we all enjoy the services those taxes pay for, like good school districts, fire, police, water, sewer and garbage pickup. And, if everybody in your neighborhood suffered the same fate as you did, buyers looking at your neighborhood should see real estate taxes at about the same amount for similar homes.

Be careful, however, because in certain places where taxes are fixed to the amount you paid for the home, you want to make sure you keep your taxes as low as possible to benefit from the lower amount you pay until you sell the home.

“In-fill” is an entirely different concept in real estate. In-fill developers will look for parcels of land that are undeveloped or are under-developed in urban areas. They will buy them and build on the property rather than moving farther out and building a whole subdivision. I don’t think your property taxes have anything to do with “in-fill” properties. But land planners like congested urban areas because it’s a more environmentally friendly way to live.

Thanks for writing.


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