How to determine ad valorem tax

by Juan Romano 06/12/2022

Latin for "according to value," the term "ad valorem" is common in tax conversations. An ad valorem tax is flexible and dependent on the value of the specific asset, product or service. If you're a property owner, you're paying an ad valorem tax on your property taxes. To better understand how this term is used, here is a short guide to how ad valorem tax is calculated:

How do you find the ad valorem tax value?

Fair market value - Fair market value is usually determined by a real estate agent after a careful examination of the property and local market. Fair market value is based on factors like size, location, features and condition of the home. It can also be affected by the values of similar properties in your neighborhood.

Appraisal value - Appraisal value is found through a professional home appraisal. Appraisers conduct a thorough inspection of your home to make sure it meets specific standards. Things like condition, age and visual appearance all factor into an appraisal value.

Assessed value - Assessed value is calculated by taking the fair market and appraisal values and applying the local tax assessment rate. Assessment rates are different depending on the municipality and can also change.

These different values combine to help you find the ad valorem tax value of a property. In turn, this value affects how much you owe in annual property taxes. Regardless of whether you want to buy, sell or refinance a home, knowing this term can help you better navigate the world of home finances.

Familiarize yourself with the differences between fair market value, appraisal value and assessed value to gain a better understanding of how your property taxes are calculated.

About the Author
Author

Juan Romano

I'm Juan Romano, a Realtor with Premiere Plus Realty.  I graduated from Florida International University with a degree of Bachelor of Accounting and a Masters in Taxation. Prior to joining the Real Estate industry I worked as an accountant (CPA) for 5 years. My 19 years of experience in the Real Estate industry allows me to serve my clients with the best decisions in their unique situations.

So, what do I do for all my clients? I take the stress away from selling or buying a home. I take care of all the details and paperwork, guide them through the process making the entire experience an enjoyable and relaxing one.