Question: I don’t get it. My home appraised at $265,000 six months ago, but the town assessed it at $106,000 on my current tax bill. How can that be?
Easy. The real estate appraiser estimated the fair market value (FMV) of your home. He was answering the everyday question “How much is it worth?”
Different Valuation Basis
The town’s assessment represents the value of your home for tax purposes. (Assessment X Tax Rate = Property Tax.) Although a few towns use assessments equal to FMV, many set it proportional to FMV. Still others use an altogether different valuation method. For example, some towns use assessments based on construction or replacement cost instead of FMV.
Assessed Value is Akin to Appraised Value
Sometimes assessed and appraised value are kissing cousins. As when construction prices determine assessed values. Sometimes they’re siblings as when the two are proportional. And on a few happy occasions they’re twins.
In the real world, the likelihood that your home’s assessed value and its appraised value are the same is small indeed!