I'm guessing but if they did then they also would require you to pay taxes on the increase in value.
To clarify, there's a difference in appraisal value done by a property appraiser that is say, hired by the owner or by a lender to perform an appraisal, and the appraised tax value generally performed by the local taxing authority property appraiser. The tax value appraisal is for determining the property taxes to be assessed and nothing else. Generally, the tax appraisal will be on average, 30% lower than the appraised market value the property is expected to sell for. That's why, for the most part, the IRS does not accept the tax value of real property as the depreciation basis.
