If I Get My House Appraised, Will My Taxes Go Up?

Property valuation is a central concern for homeowners due to its potential impact on annual tax obligations. Understanding how property values are determined and how they interact with local tax systems is important. Different types of valuations serve distinct purposes and have varying implications for a homeowner’s tax bill.

Understanding Property Valuation

A private appraisal is typically requested by a homeowner or lender for specific transactions like refinancing or selling a property. State-licensed or certified appraisers conduct these, assessing the property’s market value based on factors like recent comparable sales, property condition, and location. The resulting appraisal report remains a private document shared between the appraiser, the client, and the lender.

In contrast, a tax assessment is a valuation performed by the local tax assessor’s office to determine property tax liability. This assessment is a public record and serves as the basis for calculating annual property taxes. Tax assessors use mass appraisal techniques, valuing many properties simultaneously using standardized procedures and data. The primary goal of a tax assessment is to ensure a fair and equitable distribution of the property tax burden across all properties within a jurisdiction.

How Property Taxes Are Calculated

Property taxes are calculated through a systematic process. The first step determines the assessed value of a property, which is the valuation upon which taxes are levied. This assessed value is often a fraction of the property’s estimated market value, as determined by the tax assessor’s office through mass appraisal techniques. For example, a jurisdiction might assess properties at 50% or 100% of their estimated market value.

Local governments conduct cyclical reassessments to update property values and ensure an equitable distribution of the tax burden. Once the assessed value is established, local taxing authorities set their millage rates. A millage rate, also known as a tax rate, is expressed as dollars per $1,000 of assessed value, or as mills (where one mill equals $1 per $1,000 of assessed value).

Several exemptions and deductions can reduce a property’s taxable value, lowering the overall tax bill. Common examples include homestead exemptions for primary residences, and exemptions for senior citizens, veterans, or individuals with disabilities. Homeowners must typically apply for these exemptions, and eligibility criteria vary by jurisdiction. The final property tax is calculated using the formula: (Assessed Value – Applicable Exemptions) multiplied by the Millage Rate.

Private Appraisals and Your Tax Bill

A common concern is whether obtaining a private appraisal will increase property taxes. In most situations, getting a private appraisal for personal reasons, such as refinancing or selling a home, does not directly trigger an increase. This is because private appraisals are confidential transactions between the homeowner, appraiser, and lender. The information in these reports is generally not shared with the local tax assessor’s office.

Tax assessors rely on their own internal valuation methods and data, including mass appraisal techniques and sales data from public records, to determine property assessments. They do not typically use individual private appraisals to adjust a property’s assessed value. The purpose of a private appraisal is to determine a property’s market value for transactional purposes, which differs from the assessor’s role of valuing properties for tax equity. Therefore, the results of a private appraisal usually have no direct bearing on your property’s assessed value for tax purposes.

However, there are rare exceptions where a private appraisal might indirectly influence tax assessments. If a homeowner voluntarily submits a private appraisal to the assessor’s office, such as during an appeal, the assessor might consider it. Additionally, if the private appraisal is part of a property sale, the sale itself might trigger a reassessment in some jurisdictions.

Factors That Can Increase Property Taxes

While a private appraisal typically does not lead to higher property taxes, several other factors can increase a homeowner’s tax obligations. One common reason is a general reassessment conducted by the local tax assessor’s office. These cyclical reassessments update property values across an entire jurisdiction to reflect current market conditions, and if market values have risen, assessed values and taxes may increase.

Major home improvements are another factor that can lead to a tax increase. When homeowners undertake substantial renovations, additions, or new construction, these improvements typically enhance the property’s value. Building permits for such projects often alert the tax assessor’s office to the changes, prompting a reassessment of the improved property. This reassessment incorporates the added value of the enhancements, leading to a higher tax bill.

The sale of a property can also trigger a reassessment in certain jurisdictions. In some areas, when a property changes ownership, the assessed value is updated to reflect the recent sale price, bringing it closer to current market value. Furthermore, changes in millage rates, which are set by local government entities to fund public services, can directly impact property taxes. Even if a property’s assessed value remains unchanged, an increase in the millage rate will result in a higher tax bill.

Finally, the loss of exemptions can cause a homeowner’s taxable value to rise. If a homeowner no longer qualifies for previously applied exemptions, such as a homestead exemption due to a change in primary residence, or a senior citizen exemption due to new eligibility rules, the taxable portion of their property’s value will increase. This removal of an exemption directly leads to a higher property tax payment.