Can My Home Be Reassessed While I Have a Mortgage?

by Karina C. Hernandez
A construction loan may trigger reassessment of your home's value.

Tax assessments on real estate provide revenue for local public services, such as education. Your municipality or county tax authority, usually an assessor or treasurer, bills you annually based on your property's current recorded value. The tax authority may reassess the value now and then or when major changes to the property or its title occur, regardless of whether a mortgage lien exists on the home.

Reassessment Basics

A change in ownership, such as the sale of your home, triggers a tax reassessment. The tax authority bills the new owner based on the value at the time of sale, which is usually higher than its value under previous ownership. The assessor compares the property to recent sales and assessments conducted in the area in order to arrive at a value. Reassessment also follows construction or additions to a home, which increases the property's value. Taking out a building permit lets the assessor know you plan to add a structure or add to the home's existing structure. Structural repairs generally do not trigger reassessment.

Mortgage Appraisals

Mortgage lenders rely on a certain protocol to determine property values which is different from that used by tax assessors. Your mortgage lender requires an appraisal report by a licensed professional to ensure the home is sufficient collateral for the loan. It appraises the home when you obtain a mortgage to buy or refinance; therefore, your mortgage lender's last appraised value may vary greatly from the assessor's. While you have a mortgage, your tax authority may reassess your home's value every so often, usually no more than once every two to three years, according to Kiplinger.

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Reassessment Mortgage Effects

A tax reassessment affects your total housing costs, as an increased assessment raises your annual tax bill. When you pay taxes monthly through an escrow impound account handled by your lender, your monthly payments also go up. An escrow account allows your lender to collect one-twelfth of your tax bill along with your mortgage payment. The tax assessor sends the lender a copy of your bill annually or semi-annually, depending on your locality's tax-billing schedule. The bill reflects any changes due to reassessment.

Assessment Appeal

Up to 60 percent of properties may be overvalued by the assessor, according to Kiplinger. Because assessments do not move with market fluctuations, you may have to prove that your home's value is actually lower than the tax assessor's value to get a break on your bill. Errors in the assessor's records and a decline in property values since the last assessment are common reasons for assessment appeals. The process typically involves writing a letter and providing a professional appraisal or gathering valid comparable properties which you send to the assessor.

About the Author

Karina C. Hernandez is a real estate agent in San Diego. She has covered housing and personal finance topics for multiple internet channels over the past 10 years. Karina has a B.A. in English from UCLA and has written for eHow, sfGate, the nest, Quicken, TurboTax, RE/Max, Zacks and Opposing Views.

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