how ad valorem taxes are levied
property ad valorem taxes are usually levied by a municipality but may also be levied by other local government entities such as counties school districts or special taxing districts also known as special purpose districts property owners may be subject to ad valorem taxes levied by more than one entity for example both a municipality and a county ad valorem property taxes are typically a major if not the primary revenue source for both state and municipal governments and municipal property ad valorem taxes are commonly referred to as simply property taxes investopedia ryan oakleydetermining tax valuestax assessments for the purpose of determining ad valorem taxes are typically calculated as of january 1 each year ad valorem taxes represent a percentage of the assessed property value which is commonly the property s fair market value 1fair market value is the estimated sales price of the property assuming a transaction between a willing buyer and a willing seller who both have reasonable knowledge of all pertinent facts about the property and in a situation where neither party has a compulsion to complete the transaction fair market value can be more simply understood as just a reasonable price property subject to ad valorem taxesad valorem taxes are generally levied on both real property and personal property real property includes land buildings and other structures and any improvements to the property 2an example of an improvement is a garage added to a single family home or a road built on a parcel of land personal property ad valorem taxes are most commonly levied only on major personal property holdings such as a car or boat 3 incidental personal property such as household appliances or clothing is not usually subject to personal property taxes 