Appraised Value vs Market Value in Texas: What Homeowners Should Know
Appraised Value vs Market Value — What’s the Difference?
Market value is what your home would sell for, while appraised value is what the county appraisal district (CAD) thinks what your property is worth as on Jan 1st of the year. These two terms confuse many Texas homeowners. Understanding this difference helps you understand your protest, how your exemptions work, and what affects your annual tax bill.
What Is Market Value?
Market value is the estimated price your property would sell for in an open market under normal conditions.
It’s also called Fair Market Value (FMV) — the price a buyer and seller agree upon in an arm’s-length transaction.
Appraisal districts are required by Texas Property Tax Code §23.01 to appraise all real properties at their market value as of January 1 each year.
When you receive your Notice of Appraised Value, the “Market Value” on it is what the appraisal district believes your home could have sold for on January 1 of that year.
What Is Appraised and Assessed Value?
Your appraised value is the number your county uses as the basis for calculating property taxes.
Under Texas law, county appraisal districts (CADs) must appraise property at its market value as of January 1 each year.
Because of exemptions and caps, the value that actually gets taxed is often lower than the appraised value.
That taxable portion is generally called your Assessed Value or Taxable Value or Net Appraised Value.
In simple terms:
- Market value – what your home would sell for in an open-market, arm’s-length transaction
- Appraised value – what the CAD believes your property is worth as of January 1
- Assessed value (Taxable value) – appraised value minus exemptions and/or caps (for example, a $140,000 homestead exemption reduces the taxable portion by that amount)
If you live in your home and claim a homestead exemption, your appraised value can’t rise more than 10% per year (the cap limit).
That’s why long-term homeowners often see their assessed values far below market values.
Quick Comparison
| Feature | Market Value | Appraised Value | Assessed / Taxable Value |
|---|---|---|---|
| Definition | What your home would sell for on the open market | Value assigned by the county for property-tax purposes | Value after exemptions are applied — the amount you’re actually taxed on |
| Determined by | Real-estate market activity | County Appraisal District (CAD) | CAD minus exemptions (homestead, over-65, disabled, etc.) |
| Changes annually? | Yes, based on comparable sales | Yes, but capped at 10% per year if homestead | Yes, depending on exemption eligibility |
| Used for | Buying/selling property | Establishing taxable base | Calculating your property-tax bill |
| Can be protested? | Not directly | Yes | No — it changes automatically with exemptions |
How Texas Counties Use These Terms
Texas law defines all appraisals based on market value as of January 1, but counties use the terms differently:
- Harris County (HCAD) uses “Market Value” and “Appraised Value.” On HCAD notices, the appraised value actually means the taxable value (after caps and exemptions).
- Other counties such as Travis or Bexar often use “Appraised Value” to denote market value and “Assessed Value” to denote taxable value.
So, while most states treat assessed value and taxable value as the same thing, Texas homeowners should always read their Notice of Appraised Value carefully — the labels can vary by county.
Does Lowering Appraised Value Affect My Selling Price?
No. Your appraised value only affects your property taxes, not your home’s resale price.
Market value depends on demand, supply, neighborhood quality, condition, and other buyer preferences — not what the CAD assigns.
Should I Protest If My Appraised Value Is Capped?
Yes, always protest the market value, even if your appraised value is capped.
If you successfully reduce the market value, future appraised values will rise from a lower base.
Over time, this keeps your tax bills lower and helps your neighborhood avoid over-inflated appraisals.
For how and when to file, see:
Can the ARB Increase My Appraised Value at a Hearing?
No. Under Senate Bill 2 (2019), the Appraisal Review Board (ARB) cannot raise your appraised value during a protest unless you request it!
Will Home Improvements Raise My Appraised Value?
Yes, additions like new rooms, bathrooms, or a remodeled kitchen usually increase your appraised value.
However, basic maintenance (painting, replacing fixtures, roof repairs) generally does not.
What If My Appraised Value Is Higher Than the Purchase Price?
This is common, especially for new homeowners.
Texas is a non-disclosure state, so CADs must estimate sales prices using external data or voluntary disclosures.
If your appraised value exceeds your purchase price, you should:
- File a protest with your appraisal district before May 15.
- Submit your closing documents showing sale price and date.
The CAD will usually adjust your appraised value to match the sale if the transaction was recent.
You can also voluntarily disclose your purchase price to help the district set accurate values next year.
FAQs on Appraised, Assessed, and Market Value in Texas
Does a higher appraised value mean higher taxes?
Yes. Property taxes are calculated from the appraised (or taxable) value after exemptions and caps. A higher appraised value means a higher tax bill.
Why is my appraised value higher than what I paid?
Because Texas doesn’t require disclosure of sale prices, appraisal districts may rely on estimates. File a protest and submit your closing documents to correct it.
Should I protest market or appraised value?
Protest the market value. Reducing it indirectly limits how high your capped appraised value can go in future years. Your appraised value may or may not be capped. For the first year of ownership your market value and appraised value will be the same. They begin to diverge once your appraisal cap takes effect the second year onwards.
What is capped value in Texas?
For homestead properties, appraised value can’t increase by more than 10% per year (plus new improvements), regardless of market growth.
What is taxable or assessed value in Texas?
In most Texas counties, the assessed value (also called taxable value) is your appraised value minus any exemptions, such as homestead, over-65, or disabled exemptions. Some counties like Harris CAD label this as “Appraised Value” on your notice.
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