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
Michelle Plunkett, Associate Broker
It's simple, really. Help people. Each client is unique. Every situation deserves special attention. Each home, neighborhood and community is a perfect fit for someone. Whether you are part of a grieving family settling an estate, 1st time home buyer, Upsizing, simplifying or find yourself starting a new life chapter, I am eager to understand your needs, provide you with options, guide you along and help you to make insightful, shrewd decisions. What journey do you find yourself embarking on? I would love to share the adventure with you - keeping it exciting, fun and rewarding! I am a FULL TIME Realtor - working my schedule to fit with your lifestyle and adapting to your technological abilities. Together we can make it happen! In appreciation for your business and in keeping with the spirit of thankfulness to the community that has supported me along the way, a portion of each commission is donated to charity.
