Taxes State Taxes What Is Property Tax Reassessment? Property Tax Reassessment Explained By Logan Allec Logan Allec Facebook Twitter Website Logan Allec is a licensed Certified Public Accountant (CPA) and a personal finance expert. He has more than a decade of experience consulting and writing about taxes, tax planning, credit cards, budgeting, and more. Logan also has a master's in taxation from the University of Southern California (USC). learn about our editorial policies Updated on January 26, 2022 Reviewed by David Kindness Reviewed by David Kindness David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. 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She has a master's in journalism from the University of Missouri, and a bachelor's in journalism and professional writing from The College of New Jersey (TCNJ). learn about our editorial policies In This Article View All In This Article Definition & Examples of Property Tax Reassessment How Reassessment Works Types of Reassessment Photo: Goodboy Picture Company / Getty Images Definition Reassessment is the periodic review and revaluation of a property to determine its value for property tax purposes. During a reassessment, the assessor or hired contractor will analyze the market value of a property—as well as the current state of the real estate market and a few other factors—to determine its tax value. Definition and Examples of Property Tax Reassessment Reassessment is the process of revaluing a property to determine its new value for property tax determination. As part of the process, an assessor or hired contractor analyzes the property at hand, as well as any recent changes in the market. For example, say your property was last reassessed 20 years ago for $100,000. If it is still valued at $100,000 for property tax purposes today, you would pay the same amount of property taxes that you paid 20 years earlier. If that property is reassessed, however, the property’s value would likely have increased or decreased over time, changing the tax rate you would pay. If the value is now determined to be $200,000 following reassessment, you would pay more in property taxes. Conversely, if the property is reassessed and its value is now determined to be only $50,000, you would likely now pay less in property taxes. In this way, reassessment makes property taxes fairer across all property owners in a certain property tax jurisdiction or neighborhood. Without periodic reassessment, property owners holding similar properties with similar values on the open market could end up paying vastly different amounts of property taxes. How Reassessment Works In most states, property tax assessors are generally county-, city-, or township-level officials. These assessor offices are responsible for assessing and reassessing property within their jurisdiction. Note Although the actual reassessment is handled at the local level, state law determines how often property in the state is reassessed. Intervals of reassessment between appraisals vary from one to 10 years, depending on the state. When a property is up for reassessment, the property tax assessor determines the fair market value of the property based on the location and property type. The methodology for determining this value will differ based on location and property. After the reassessment is completed, many property tax offices will notify the property owner of the new assessment results. The property owner then has a chance to challenge or appeal the reassessment if they believe it is not accurate. Reassessment does not necessarily mean that a property owner’s property taxes will increase. If the real estate market in the area is declining, a reassessment could very well result in a decrease in the amount of property taxes an owner pays. A reassessment could also result in no change in the value of a property, as well. The results depend on both the property value and the real estate market in the area. Note Some states impose significant limitations on the frequency of reassessment. For example, California’s Proposition 13 permits an inflationary increase in a property’s valuation at no greater than 2% per year, but does not permit reassessment on a property unless the property’s ownership changed or new construction was completed. Types of Reassessment Property tax assessors have a variety of methods through which they can value a property. In some states, such as New York, the assessor may also apply an equalization rate to determine the actual value upon which the property taxes should be based. However, the examples below assume that these properties’ jurisdictions do not apply an equalization rate. Market Approach Using a market approach to reassessment, a property tax assessor will compare the property being reassessed to similar properties in the area that have recently sold. This method is often used to value residential, vacant, and farm properties. For example, if a house was previously assessed years ago at $100,000, but a nearly identical property down the street sold last week for $200,000, then the assessor may decide that the property should be reassessed with a valuation of (or around) $200,000. Cost Approach Using a cost approach to reassessment, a property tax assessor will base a property’s valuation on what it would cost to construct an identical property using today’s prices for labor and materials. They will also adjust the value for depreciation and the market value of the land. Industrial, special purpose, and utility properties are often valued using the cost approach. Let’s say a laboratory building was assessed five years ago at $100,000. If an assessor was to reassess the property, they would take into account the following factors based on present-day information: Cost of materials and labor to construct an identical building Value of the land the building sits on Cost of wear and tear the building has endured over time Income Approach With this method, a property tax assessor will base a property’s valuation on the income it would produce if rented out to tenants. Naturally, income-producing property like an apartment building is often valued using the income approach. The assessor considers: Operating expensesInsuranceMaintenance costsFinancing termsAmount the owner expects to earn Note In most cases of reassessment, the assessor’s office will often determine the “highest and best use” of a property to reassess its value. For example, if a hotel is being mismanaged resulting in a relatively low net income, the assessor’s office may calculate its income for reassessment purposes as though it were well-managed. Owner-Initiated Reassessment Property owners will occasionally seek to have their property reassessed if they believe that their property declined in value. If a property owner can show that their property is worth less than the assessed value, then their property will be reassessed at the lower value, resulting in the owner paying less in taxes. Key Takeaways Reassessment is the periodic review and revaluation of a property to determine its value for property tax purposes.Assessors can use multiple methods to determine the value of a property for property tax purposes, including the market approach, the cost approach, and the income approach.Property owners may likewise seek to have a property reassessed on their own if they believe it should be valued for less than the value at which it was previously assessed. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. New York State Department of Taxation and Finance. "Reassessments." Accessed Jan. 26, 2022. Nevada Legislature. "A Guide to Property Taxes: An Overview," Page 6. Accessed Jan. 26, 2022. County of Lake California. "California Property Tax: An Overview," Page 1. Accessed Jan. 26, 2022. New York State Department of Taxation and Finance. "How Property Is Assessed." Accessed Jan. 26, 2022. International Association of Assessing Officers. "Standard on Valuation of Personal Property," Page 10. Accessed Jan. 26, 2022.