It is important for property owners to understand how the value of the property is assessed as the assessed values are used by the property tax authorities to determine the tax bill. This article will brief you on what property appraisal is all about and the different property appraisal approaches. Let’s also understand the difference between the assessed value of a house vs. the appraised value.
Understanding property appraisal
A property appraiser is an elected official who appraises a property. They are responsible for discovering the market value based on a few factors in the real estate marketplace. The market value is an estimate of the selling price which is determined based on the sale of similar properties in the neighborhood. A property appraiser provides the taxing authorities information on the property valuations which is used to determine property taxes. The respective county appraisal districts taxing authorities then determine the tax rate based on how much money is required to fund the budget. The property values are assessed on January 1st of every year. Now that we have an idea of what property appraisal is let’s dig a little deeper and understand how data is collected.
How is data collected?
In order to make an estimate, the appraiser has to collect the right data. The following factors are taken into consideration:
- the sale price of similar homes in the neighborhood
- the cost of newly constructed buildings
- improvements made, their value, and the lifespan for depreciation and rental cost.
Information on rents is taken from the MLS database or other third-party websites. An appraiser gets information about newly constructed buildings and remodeling costs by getting an estimate on the labor charged and the materials by other experienced builders in the local market. As per the IRS guidelines replacements or additions to residential property are depreciated over a period of 27.5 years.
Know more about the property valuation methods. Queries on property appraisal or property tax are addressed by the county appraisal district or by tax assessor-collector. The comptroller’s Texas gov. website provides information on the contact details for CAD’s and county tax offices.
Understanding the difference between tax assessed value and the appraised value
Many houses have an assessed value and an appraised value. The assessed values are used by property tax authorities to bill for the property whereas the appraised value determines the market value of the property. A tax assessment is used to determine the value of a property and it sometimes reflects what you could get if the property was sold. On the other hand, in a property appraisal, an appraiser visits and takes a tour inside the property, takes a look at the improvements, compares the sales with the other properties in the neighborhood, and makes an estimate of the market value.
Appraisals can help you lower property taxes
The relationship between both the assessed and appraised values varies based on where you live. In most cases, the assessed values increase only by two percent every year. Over a period of time, the appraised values might exceed the assessed value which might result in an increase in the tax bills. In this case, the property tax appeal process can help you lower your taxes.
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