How to Calculate Ad Valorem Tax

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Ad valorem tax is a tax placed upon the value of real estate or personal property. Ad valorem is a Latin term meaning "according to value." This type of tax can be assessed on the item at the point of sale (a sales tax), on an annual basis (property taxes), or in conjunction with a major life event (inheritance tax). Most commonly in the United States, ad valorem tax refers to property tax or the tax that you have to pay per year on your real estate holdings.

Find the assessed value of your real estate holdings by searching your county's or city's GIS (Geographic Information System), or both . Most of the time, you can find the value online; if not, you can find this number either on your most recent tax bill or by calling your county or city tax office.

Find out the millage for your county or city, or both, by contacting the tax office. This is the percentage that your land is taxed.

Multiply your real estate's assessed value by the millage rate and divide by 1000. For example, if your property's assessed value is $100,000 and your millage rate is 50, your taxes will be $5,000.

Warnings

  • Always double-check the assessed value of your real estate; if you feel it is high, you can request an independent appraisal to help you fight the value. Keep in mind, however, that you may have to pay for this appraisal out of pocket. Also, if you have recently refinanced or purchased your home and your assessed value is higher than your appraisal, you can fight the value with that appraisal. Always keep the copies of your appraisals in the event of an assessed value issue.

Tips

  • Check with your local tax assessor's office to see if there are any reductions in millage rate for those in retirement age (some municipalities waive the taxes that fund the school system for retirees). Also, some areas will freeze assessed values of homes in order to keep the tax bill reasonable in spite of the rise in market values of homes. It is wise to ask your assessor about this as well.

References

About the Author

Lynn Lauren has been a professional writer since 1999, focusing on the areas of weddings, professional profiles and the banking industry. She has been published in several local magazines including "Elegant Island Weddings." Lauren has a Master of Business Administration and a Bachelor of Business Administration, both with marketing concentrations from Georgia Southern University and Mercer University, respectively.