Tax value vs. sale price vs. appraisal
The same house can have three different numbers attached to it: a tax value set by the local tax office, a sale price agreed in the contract, and an appraised value from the appraisal done for the lender. They are set by different people, on different dates, for different jobs, so they often don’t match.
This is general education, not legal or tax advice. Your local appraisal district or tax assessor has your home’s actual tax value and the exemptions you may apply for. Your lender decides how its loan is figured.
The three values at a glance
| Value | Who sets it | What it’s used for | When it’s set |
|---|---|---|---|
| Tax value | The local appraisal district or tax assessor, under state law. | The property tax bill, after any exemptions and limits. | On a valuation date set by state law, often once a year. Some states also revalue when a home is sold or newly built (see below). |
| Sale price | The buyer and seller, in the purchase contract. | What the buyer agrees to pay. Lenders compare it with the appraised value. | When the contract is signed (and any amendments). |
| Appraised value | An appraiser, for the lender. | The lender’s loan-to-value (LTV) calculation. | During the loan process, before closing. |
States also use different words for the tax value. Texas law, for example, separates three terms: market value (the price the property would sell for in the open market under the conditions the law lists), appraised value (the value determined under the state’s appraisal chapter), and assessed value (appraised value multiplied by an assessment ratio).Source: Texas Tax Code §1.04(7)–(9) (definitions: market value, appraised value, assessed value) · checked Nov 10, 2026 Florida’s constitution uses “just value” and “assessed value.”Source: Florida Constitution, Article VII, Section 4(d) and (g) (Taxation; assessments) · checked Nov 10, 2026 California uses “full cash value” and “base year value.”Source: California Revenue and Taxation Code §110.1(a)–(b) (amended Stats. 2017, ch. 80) · checked Nov 10, 2026
Why taxes can reset after a purchase
Many states limit how fast a homeowner’s tax value can rise, but those limits are tied to the owner. When the home sells, the rules below can reset the value for the new owner, so the seller’s tax bill may not predict the buyer’s. Here is how several states’ laws handle it, side by side.
California
- Property tax is limited to 1% of the property’s “full cash value,” plus taxes for voter-approved debt.
- Full cash value is the appraised value when the property is purchased, newly constructed, or changes ownership (after the 1975 assessment).
- After that, the value can rise with inflation by no more than 2% a year.Source: California Constitution, Article XIII A, Sections 1(a) and 2(a)–(b) (Proposition 13) · checked Nov 10, 2026
- The value set at the purchase, change in ownership, or completed new construction becomes the new “base year value.”Source: California Revenue and Taxation Code §110.1(a)–(b) (amended Stats. 2017, ch. 80) · checked Nov 10, 2026
- When a change in ownership occurs or new construction is completed, the assessor appraises the property or the new construction at full cash value as of that date, under the state’s supplemental roll rules.Source: California Revenue and Taxation Code §75.10(a) (supplemental roll; amended Stats. 1997, ch. 940) · checked Nov 10, 2026
Florida
- For a homestead, yearly increases in assessed value can’t exceed the lower of 3% or the change in the Consumer Price Index, and the assessment can’t exceed just value (the “Save Our Homes” limit).
- After a change of ownership, the homestead is assessed at just value as of January 1 of the following year. A new homestead is assessed at just value as of January 1 of the year after it is established. A separate rule, paragraph (8), lets an owner who received a Florida homestead exemption in any of the 3 years before have the new homestead assessed at less than just value, under a formula in that paragraph.
- For other residential property with nine units or fewer (for example, a second home or rental), non-school assessments can rise no more than 10% a year, and the property is assessed at just value after a change of ownership or control.Source: Florida Constitution, Article VII, Section 4(d) and (g) (Taxation; assessments) · checked Nov 10, 2026
- Florida voters passed Amendment 3 on November 3, 2026. It takes effect January 1, 2027, lowers that 10% limit to 5%, and raises the homestead exemption for non-school levies to up to $150,000 of assessed value in 2027 and $250,000 in 2028 (see the 2027 amounts). It doesn’t change the Save Our Homes paragraph above.Source: Florida CS/HJR 1-F (2026), enrolled text (Amendment 3), Article VII, Section 4(g)(1); Florida Department of Revenue, Property Tax Oversight Informational Bulletin PTO 26-21, Constitutional Amendment 3 (Nov 5, 2026) · checked Nov 10, 2026
Georgia
- Homestead exemptions depend on owning the home and having it as a legal residence as of January 1 of the taxable year.
- Several counties have an exemption that freezes the property’s valuation at the base-year valuation for as long as the homeowner resides on the property; in some counties the base year valuation can rise by a set percentage each year. The county has the details.
From the Georgia Department of Revenue’s guidance.
Illinois
- When a home sells, the general homestead exemption stays in effect for the rest of that assessment year. The new owner may need to apply (or reapply) for the next year; in Cook County, the assessor mails the new owner notice and forms.Source: 35 ILCS 200/15-175 (general homestead exemption) · checked Nov 10, 2026
Michigan
- Taxable value can rise each year by no more than the lesser of 5% or the inflation rate (plus additions), and can’t exceed the current state equalized valuation.
- After a transfer of ownership, the taxable value for the following year is the property’s state equalized valuation for that year, so the seller’s capped value doesn’t carry over. The cap then applies again until the next transfer.
North Carolina
- Each county reappraises real property at least every eight years. A county of 75,000 or more people must reappraise sooner if its sales assessment ratio is below .85 or above 1.15.Source: N.C. Gen. Stat. §105-286 (time for general reappraisal) · checked Nov 10, 2026
- Between reappraisals, the assessor can’t raise or lower a property’s appraised value because of normal depreciation, inflation, deflation, or other economic changes affecting the county in general. The value can change for other reasons the statute lists.Source: N.C. Gen. Stat. §105-287 (changes in appraised value between reappraisals) · checked Nov 10, 2026
New York
- All real property in an assessing unit must be assessed at a uniform percentage of value, called fractional assessment. The statute keeps an exception for a city of one million or more people that used a classified standard before 1981.Source: New York Real Property Tax Law §305, Assessment methods and standard · checked Nov 10, 2026
- The assessor first estimates market value, usually for homes by comparing similar properties that recently sold, and then applies the municipality’s level of assessment. In the state’s example, a city assessing at 27% would assess a $100,000 home at $27,000.Source: New York State Department of Taxation and Finance: “How property is assessed” (updated April 20, 2021) · checked Nov 10, 2026 The state’s equalization rate measures that level: total assessed value ÷ total market value of the municipality.Source: New York State Department of Taxation and Finance: “Equalization rates” (updated August 25, 2025) · checked Nov 10, 2026
- A sale doesn’t by itself set a new assessment. State counsel’s opinion: an assessor may not selectively reassess property, such as reassessing only properties that recently sold or were improved. An assessor can change one property’s assessment but must be ready to show how the change brings it in line with assessments left unchanged.Source: New York State Office of Real Property Tax Services: Opinions of Counsel, Volume 10, SBRPS No. 60 (selective reassessment; page updated January 12, 2018) · checked Nov 10, 2026
- In assessing units with a population of one million or more, the assessment of a class one property (one-, two-, and three-family homes) can’t rise more than 6% in one year or 20% in five years. New construction, additions, and improvements aren’t counted against those limits.Source: New York Real Property Tax Law §1805, Limitation on increases of assessed value of individual parcels (with §1801(a) and §1802); New York Real Property Tax Law §1801, Definitions; New York Real Property Tax Law §1802, Classification of real property in a special assessing unit · checked Nov 10, 2026
Ohio
- If a property had an arm’s-length sale between a willing seller and a willing buyer within a reasonable time before or after the tax lien date, the county auditor may consider the sale price to be its true value for taxation.
- The sale price isn’t considered the true value if, after the sale, the property loses value due to a casualty or an improvement is added.Source: Ohio Revised Code §5713.03 (effective Oct 3, 2023) · checked Nov 10, 2026
Pennsylvania
- County assessment offices are prohibited from “spot reassessment”: reassessing one or more properties outside a countywide revision of assessment in a way that creates, sustains, or increases disproportionality among properties’ assessed values. A board ruling on an appeal isn’t a spot reassessment.Source: 53 Pa.C.S. §8843 (spot reassessment); 53 Pa.C.S. §8802 (definitions: “spot reassessment”) · checked Nov 10, 2026
Texas
- All taxable property is appraised at its market value as of January 1.Source: Texas Tax Code §23.01(a) (appraisal as of January 1) · checked Nov 10, 2026
- For a residence homestead, the appraised value can’t rise more than 10% over the prior year’s appraised value, plus the market value of new improvements.
- That limit takes effect on January 1 of the tax year after the owner first qualifies the home for the homestead exemption. It ends on January 1 of the first tax year that neither the owner when the limit took effect nor that owner’s spouse or surviving spouse qualifies.Source: Texas Tax Code §23.23(a)–(c) (limitation on appraised value of residence homestead) · checked Nov 10, 2026
- The homestead exemption from school district taxes is set in §11.13 (see property-tax exemptions).Source: Texas Tax Code §11.13(b), (c) (residence homestead) · checked Nov 10, 2026
What these three have in common: a limit or base value that protected the seller generally doesn’t carry over to a buyer automatically. The buyer’s first full tax bill can be based on a new value, and the new owner’s exemptions depend on the new owner meeting that state’s rules.
How lenders use the sale price and the appraised value
For a purchase, lenders generally divide the loan amount by the lower of the sale price and the appraised value. The rules don’t use the tax value for this.
| Program | Rule | Source |
|---|---|---|
| Conventional: Fannie Mae | “The property value is the lower of the sales price or the current appraised value.” | Source: Fannie Mae Selling Guide B2-1.2-01, Loan-to-Value (LTV) Ratios · checked Nov 10, 2026 |
| FHA | The Adjusted Value is the lesser of the purchase price less any inducements to purchase, or the Property Value (the value from the appraisal). | Source: HUD Handbook 4000.1, II.A.2 (Adjusted Value) · checked Nov 10, 2026 |
| VA | No down payment as long as the sales price isn’t higher than the home’s appraised value. | Source: VA: “VA-backed purchase loan” (page last updated Jan 7, 2026) · checked Nov 10, 2026 |
| Conventional: Freddie Mac | For a purchase, the value is “the lesser of the appraised value of the Mortgaged Premises as of the appraisal report effective date and the purchase price of the Mortgaged Premises.” For new construction, more than one contract may be combined to set the purchase price. | Source: Freddie Mac Single-Family Seller/Servicer Guide, Section 4203.1, LTV/TLTV/HTLTV ratio requirements (effective 10/07/2026) · checked Nov 10, 2026 |
Made-up illustration
Illustration: an appraisal below the price
Sale price $300,000; appraised value $290,000; loan $270,000.
Using the price: $270,000 ÷ $300,000 = 90.00%.
Using the lower value: $270,000 ÷ $290,000 = 93.10%.
The lower value gives the higher LTV, which can change the down payment needed, the mortgage insurance, or the program limits that apply. These numbers are made up for the illustration.
Try your own numbers in the LTV calculator, which uses the lower of the price and appraised value. More on the ratio: DTI and LTV explained.
Your copy of the appraisal
- For a loan secured by a first lien on a home, the lender must tell you in writing, within 3 business days after your application, that you have a right to a copy of the appraisals.
- It must give you a copy of each appraisal or other written valuation promptly when it is completed, or 3 business days before consummation (closing), whichever is earlier. You may waive that timing and get the copy at or before consummation.
- The lender can’t charge you for providing the copy.Source: 12 CFR 1002.14(a) (Regulation B: providing appraisals and other valuations) · checked Nov 10, 2026
How the tax line in escrow is estimated
When a servicer sets up escrow, it uses the next tax bill if it knows it. If it doesn’t, it may use the preceding year’s bill, or that bill adjusted by no more than the most recent year’s change in the Consumer Price Index. For unassessed new construction, it may use the assessment of comparable homes in the area.Source: 12 CFR 1024.17 (Regulation X, escrow accounts) · checked Nov 10, 2026
A preceding year’s bill reflects the prior owner’s value, exemptions, and any limit they had. If the value resets for the new owner, a later escrow analysis can raise the payment. See The new-build escrow jump and try the escrow jump calculator.
What you can check
- Look up the home’s record with the local appraisal district or tax assessor, and ask how a sale affects the value and which exemptions you can apply for.
- Ask your lender which tax figure its estimate uses.
- Compare the sale price with the appraised value on your copy of the appraisal.
- Remember that an appraisal isn’t a home inspection; see Title, liens, and inspections.
Guidelines change; confirm with a licensed lender.