Ad Valorem Tax

In real estate, an ad valorem tax is a tax levied on the assessed value of real property or personal property. The term “ad valorem” is Latin for “according to value,” reflecting the tax’s basis on the value of the property being taxed. These taxes are typically imposed by local governments, such as counties or municipalities, to generate revenue for public services and infrastructure projects. The assessed value of the property is determined by local assessors based on factors such as market value, property size, and improvements. Ad valorem taxes are a primary source of funding for local governments and are often used to finance schools, roads, public safety, and other essential services within a community.