The tax assessment does not automatically change every year, although the tax rate does -- it goes up, usually, year to year. So, you won't see a change in the assessed value except if the town revals every house, as it did some years ago. Even if this house sells under perceived "market value," the town is going to want to see whether you can prove that it's worth less for reasons OTHER than it needed lender approval or was a foreclosure, i.e., the condition was degraded for some reason. Renovations needing municipal permits may well mediate toward a tax hike when they are completed. I would suggest talking to a local tax attorney such as Greg Lotz in Montclair to discuss further what you need to know about the housing tax structure here and implications for the future of this home or any other you're considering. Best of luck.