Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

A tax exemption reduces the amount of which property-related value?

1. Market Value

2. Assessment Value

3. Appraisal Value

4. Sale Price

The correct answer is: Appraisal Value

A tax exemption specifically reduces the amount of the assessment value of a property. The assessment value is what local taxing authorities use to determine property taxes owed. When a property owner qualifies for a tax exemption, it lowers the assessed value, which leads to a reduction in the property tax liability. While market value reflects what a property could sell for in the current market, and appraisal value refers to the valuation placed on a property by a licensed appraiser, these values do not directly correlate with the amount of property taxes assessed. Sale price, on the other hand, is the actual price at which a property sells, which can be influenced by many factors beyond just tax exemptions. Thus, the true impact of a tax exemption is most directly seen in the reduction of the assessment value, not the other values listed.