What is the Difference Between the Market Value and the Appraised Value (Homestead Cap Value)?

When you receive your Notice of Appraised Value, you may notice two different values printed on it. Having multiple and different values on the notice can be confusing, especially with regards to the Homestead Exemption and the “homestead cap.”

Market Value

Per the Texas Property Tax Code, all taxable property must be valued at 100 percent of market value as of January 1 each year. This value is shown on your notice as “Market Value.” Because it is based on recent sales, the Market Value may change upwards or downwards any amount depending on recent market trends and is not limited to increases of 10 percent or more. It may change as much as the current market changes.

Appraised Value (“Homestead Cap Value”)

Per the Texas Property Tax Code, an exemption for taxation is available to an individual’s primary residence. One of the features of the exemption is a limit to the amount that the value for taxation can increase from one year to the next. This limit is frequently referred to as the “homestead cap.” The “capped” value is shown as the “Appraised Value”. The appraised value is limited by the Homestead Exemption and may not go up more than 10 percent in one year in most cases as long as the exemption was in place for the prior year for the current owner (There’s an exception for new construction). This number is calculated using the previous year’s Appraised Value and a “cap” of 10 percent.”

Category: Homestead Exemption