Market Value vs Assessed Value

Property taxes in Texas, a crucial component of local government revenue, often spark confusion among homeowners. A common misconception is that these taxes are directly tied to a property's market value. However, the reality is more nuanced, with the calculation of property taxes depending on the assessed value, which, while related, is not identical to the market value.

Assessed Value: The Basis for Property Taxes

In Texas, property taxes are calculated based on the assessed value of the property. This value is determined by the county tax assessor and is influenced by recent home sales in the neighborhood. The assessed value per square foot (SF) is a critical factor in this evaluation. Tax assessors examine the prices of recently sold homes in the area, using this data to calculate the assessed value/SF for each property.

This process, while reflective of the property market trends, does not equate the assessed value with the market value. Instead, it offers a standardized method to levy property taxes fairly across different properties, taking into account the relative value of homes within the same community.

Market Value: A Different Concept

Contrasting sharply with the assessed value is the market value of a property. This figure is not used for tax purposes but is vital for real estate transactions. Market value is determined by the interplay of supply and demand, influenced heavily by the property's location, amenities, and specific features. Unlike the assessed value, which focuses on a per SF basis, the market value considers the overall appeal and desirability of a property in the broader real estate market.

The Necessity of Tax Protests in Houston

For Houstonians, an annual ritual has become crucial – protesting property taxes. This practice is not just a form of civic engagement but a necessary step to ensure fair taxation. By protesting their property taxes, homeowners challenge the assessed values set by tax assessors. This action is not merely about seeking a reduction in taxes but serves a more significant purpose. It acts as a check against unwarranted increases in assessed values, ensuring that tax assessors do not arbitrarily raise values without justification.

The protest process allows homeowners to present arguments and evidence, such as discrepancies in the assessor's valuation methods or overlooked factors like property defects. This engagement ensures a more accurate and fair assessment, aligning it closely with actual market conditions and preventing overvaluation.


The relationship between market value and assessed value in Texas property taxation is a complex but crucial distinction for homeowners to understand. While both are indicators of a property's worth, they serve different purposes and are calculated differently. The annual ritual of protesting property taxes in Houston and other parts of Texas is not just a right but a necessary action to maintain fairness and accuracy in property taxation. This process underscores the dynamic nature of real estate valuation and the importance of active homeowner participation in the tax assessment process.