Assessed value vs market value comes down to purpose. Market value is the price a buyer is willing to pay a willing seller in an open sale. Assessed value is the dollar figure your local assessor puts on a property for tax purposes, often a fixed percentage of full worth, a capped number, or both. The two match only where a state assesses at 100% and reappraises every year.
Your tax bill comes from the assessment, not the sale price. A home that would sell for $400,000 can carry a $40,000 assessment in Cook County, Illinois, $160,000 in Georgia, and something near its original purchase price in California. None of those is wrong. Each follows a different state rule.
Four Numbers on One House: Market, Appraised, Assessed, Taxable
Each figure has a different author and a different job, which is why people mix them up.
| Measure | Who sets it | Used for | How it changes |
|---|---|---|---|
| Market value (fair market value) | Buyers and sellers, based on recent sales | Listing price, offers, negotiation | Daily, with local market conditions |
| Appraised value | A licensed appraiser hired by a lender, or a county appraisal district | Mortgage approval, refinancing, or the tax roll | Per transaction, or on the district’s cycle |
| Assessed value | The county or town assessing office | Starting point for the tax | Yearly or on a multi-year cycle, often capped |
| Taxable value | The same office, after exemptions and caps | The base the tax rate applies to | Each year, within legal limits |
Fair market value is the price in an arm’s-length sale between a knowledgeable buyer and a willing seller, per the Georgia Department of Revenue. An assessment ratio is the share of that price a state taxes: at Georgia’s 40%, a $300,000 home is assessed at $120,000. Taxable value is what remains after exemptions and caps.
Watch the word “appraised.” In Texas, the appraisal district’s figure is what goes on the tax roll, and for a homestead it can’t rise more than 10% a year (Texas Comptroller). A lender’s appraisal never reaches the tax office.
Why the Assessor’s Number Rarely Matches the Sale Price
Three mechanisms pull the two apart: fractional assessment ratios, caps on annual increases, and reappraisal lag.
Fractional assessment ratios
Many states tax only a slice of full worth by law. Illinois requires property other than farmland and coal to be assessed at 33 1/3% of fair cash value (35 ILCS 200/9-145), and Cook County sets its residential level at 10%. South Carolina uses 4% for a legal residence and 6% for other real property. A low ratio doesn’t mean a low bill. Local tax rates are set to raise a budget, so a 4% ratio simply pairs with a much higher millage.
Caps: Prop 13, Save Our Homes and Michigan’s Proposal A
Caps limit how fast an owner’s assessment can climb, whatever the real estate market does, a design the Lincoln Institute of Land Policy has studied for decades.
- California, Proposition 13: the base year figure is set at purchase and rises by the California Consumer Price Index or 2%, whichever is lower. The State Board of Equalization’s January 13, 2026 letter to assessors reported a 3.307% CCPI increase and still held the 2026 factor to 1.02.
- Florida, Save Our Homes: a homestead’s assessment can rise no more than 3% or the CPI change, whichever is less. The Florida Department of Revenue’s January 2026 table sets the 2026 cap at 2.7%. In 2022 and 2023, CPI ran 7.0% and 6.5%, yet assessments were held to 3.0%.
- Michigan, Proposal A: the taxable figure can grow by the lesser of 5% or inflation. The State Tax Commission’s Bulletin 14 of 2025 fixed the 2026 inflation rate multiplier at 1.027. In 2023, inflation hit 1.079 and the cap held homes to 1.05.
Caps compound. In a hypothetical where the assessment rises 2% a year while prices rise 7%, after ten years the assessment sits near 62% of what the home would sell for. That drift is the main reason assessments run lower than market value in capped states.
Reassessment cycles and lag
Counties don’t revisit every home every year. Texas requires appraisal districts to reappraise all property at least once every three years, with each valuation set as of January 1. Illinois computes each county’s equalization factor from three years of sales. In a fast market the assessment trails real prices, and when prices drop it can sit above them.
Assessment Ratios and Caps in Seven States
We checked each rule below against the state’s own statute, bulletin or revenue department page in September 2026. The last column assumes a hypothetical $300,000 owner-occupied home in its first year, before exemptions.
| State | Rule for homes | Source | Assessment on $300,000 |
|---|---|---|---|
| California | 100% at purchase, then 2% max per year | Board of Equalization, 2026 | $300,000, then $306,000 |
| Florida | Full just worth; homestead increases capped at 2.7% for 2026 | Florida Dept. of Revenue, 2026 | $300,000, then capped growth |
| Georgia | 40% of full worth | O.C.G.A. 48-5-7 | $120,000 |
| Illinois (outside Cook) | 33 1/3%, then county equalization factor | 35 ILCS 200/9-145 | $100,000 before equalization |
| Illinois (Cook County) | 10% residential, then state equalizer (3.0355 for 2024) | Cook County Assessor; IDOR, 2025 | $30,000, about $91,000 equalized |
| Michigan | 50% state equalized; taxable growth capped | State Tax Commission, 2025 and 2026 | $150,000 |
| South Carolina | 4% legal residence, 6% other real property | S.C. Code 12-43-220 | $12,000 ($18,000 as a rental) |
| Texas | 100% as of January 1; homestead cap 10% a year | Texas Comptroller, 2026 | $300,000 |
To compare states, divide the assessment by the ratio. A Georgia notice showing $120,000 implies a $300,000 opinion of worth, and that implied figure is the one to argue about. For turning an assessment into a bill, see how to calculate property tax.
Is Your Assessment Higher Than Market Value?
It can be, and then you’re probably overpaying. The gap flips when prices fall faster than updates, when records are wrong (an extra bathroom, a basement listed as finished), or when a mass appraisal model misses your neighborhood.
Mass appraisal is graded on accuracy. The International Association of Assessing Officers (IAAO), the professional body for the field, says in its Standard on Ratio Studies (2013) that the overall appraisal level for a class of property should fall between 0.90 and 1.10. That’s a tolerance for averages. Individual homes miss by more.
Some states build in protection. Florida’s PT-112 brochure says a homestead’s assessment “will never be more than the just value of your home,” and California’s Proposition 8 lets a county temporarily lower an assessment below the factored base year figure when prices drop. Everywhere else, the remedy is an appeal:
- Convert the notice to full worth. Divide the assessment by your state’s ratio so you compare like with like.
- Check the property record card. Square footage, bedroom count and condition errors are the easiest wins because they’re facts, not opinions.
- Gather comparable sales. Use three to five nearby sales close to the January 1 lien date, or a real estate agent’s comparative market analysis.
- File before the deadline printed on your notice. Missing it usually means waiting a full year.
One mistake we see on our calculator pages constantly: people enter a Zillow home value estimate where the county’s number belongs, then wonder why the result looks high. Use the tax assessment on your notice. Our guide to lowering property taxes covers exemptions that stack on top of a successful appeal.
What Buyers Should Know: The Tax Bill Resets After a Sale
In a capped state, the previous owner’s bill isn’t yours. Caps belong to the property owner, not the house, and a sale wipes them out.
- Florida: after a change of ownership, the home loses its Save Our Homes benefit and is assessed at just value the next January 1, per the Florida Department of Revenue.
- Michigan: taxable value “uncaps” the year after a transfer and resets to the state equalized figure, 50% of true cash worth, under the State Tax Commission’s Transfer of Ownership Guidelines (revised February 25, 2025).
- California: the purchase price becomes the new base year figure, taxed at a 1% general levy plus voter-approved bonds.
A hypothetical: a Florida seller who bought years ago shows a $210,000 homestead assessment on a house you’re buying for $450,000. Your first full year is figured on roughly $450,000 less your own exemptions, more than double the old base. Lenders often escrow on the old bill at closing, a common reason Florida buyers get an escrow shortage letter a year later.
Caps also keep owners in place. The Lincoln Institute cites a California Legislative Analyst’s Office study: 16% of properties sold each year before Proposition 13, versus 5% thirty-five years later.
Before you make an offer or file an appeal, pull the county property notice and find three numbers: the assessment, your state’s ratio, and whether a cap resets at sale. Then run the reset figure through your state property tax calculator. Assessed value vs market value only matters once you know which one your bill is built on.
Frequently Asked Questions
Which is higher, assessed value or market value?
Market worth is usually higher. Ratios like Georgia’s 40% and caps like Proposition 13 keep assessments below sale prices for most homes. An assessment can exceed the true market value after a sharp price drop or when the county’s records are wrong.
Can I sell my house for more than the assessed value?
Yes. The assessment is a tax figure, and buyers pay what comparable sales support. In a capped state like California or Florida, a long-held home can sell for far more than its assessment.