FAQ #12: How Will the Appraisal Affect My Property Taxes?
March 23, 2023
Ryan Bays, SRA, AI-RRS
I'm a husband, a father to six girls, and an SRA & AI-RRS designated real estate appraiser at Riverfront Appraisals, LLC with offices in Owensboro, Kentucky and Tell City, Indiana.
Legal Disclaimer stuff: I’m an appraiser. Not a tax attorney. If you need legal advice, don’t come to me. Go to your attorney. Good. That’s all.
I was having coffee a few weeks ago with a friend, and we were exchanging various work stories when we found ourselves talking about complaints from homeowners. I said I’ve had my fair share of those, but one stands out in my mind – the time when a homeowner complained about his home appraising too high. Yes, it does happen, although not often. This one guy was an anomaly for sure, but I have had several instances where the homeowner asked me to ‘make sure and keep that value down.’ Why, you ask? They didn’t want the tax assessor raising their property taxes!
So in this short FAQ, we’ll answer the question, “How will the appraisal affect my property taxes?”
And before we get too far along, for purposes of this blog, ‘appraisal’ refers to a real estate appraisal completed on your property for a refinance or purchase transaction.
Here’s where that legal disclaimer really comes in. There’s plenty of variation between cities, counties, and jurisdictions when it comes to how your property taxes are calculated. So take this as a general guideline and you’ll be set.
Most jurisdictions, generally speaking, base your property taxes on the assessed value of your property. And this assessed value is normally not determined by a real estate appraiser acting as a real estate appraiser. Although some assessors are also appraisers, for the most part, assessors don’t usually hire an outside appraiser to assess your property taxes.
For appraisals completed for mortgage financing, the lender is the client. They engage the appraiser, and when the report is ready, the report goes back to the client. And no one else. That means the appraiser doesn’t also send a copy to your Realtor, your neighbor, your Aunt Merryl, and definitely not the tax assessor.
Most homeowners want to make sure the assessor either doesn’t know about their recent unpermitted addition, or that they spent $100,000 on upgrades recently, because they don’t want those to be reflected in their assessment. Rest assured, if your taxes do go up, it won’t be the appraiser to blame. The appraiser cannot send anyone a copy of the appraisal who is not identified as the client.
In a future post, we’ll talk about the ways an appraisal can help you reduce your taxes, so stay tuned.
As always, I strongly recommend you consult with a trusted tax professional or real estate attorney if you have any questions. You can also contact your local tax assessor to find out how your property taxes are calculated.