Moneyzine
Contents
/Personal Finance/Ad Valorem Tax (Property Tax)

Ad Valorem Tax (Property Tax)

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
September 25th, 2023
Advertiser Disclosure

Definition

The term ad valorem tax refers to a tax that is based on the assessed value of a property, service, or product. Ad valorem is a Latin phrase which means "according to value," and this type of tax is usually imposed at the time of a transaction. Common examples of an ad valorem tax include property and sales tax.

Explanation

Ad valorem taxes are oftentimes the primary source of revenues for state and local governments. The term can refer to any tax imposed based on the value of the property, service, or product. An individual or business may be required to pay an ad valorem tax simply by owning an asset. Alternatively, the tax may be collected when a transaction occurs. The most common examples of ad valorem taxes include:

  • Property Taxes: also known as real estate taxes; these are collected by municipal governments on a quarterly basis and the amount of tax owed is based on the assessed value of the property owned.

  • Sales Tax: collected when a transaction occurs; the amount of tax owed is based on the purchase price of the product or service. In addition to being an ad valorem tax, sales tax is also classified as a consumption tax.

  • Duties: collected when certain goods are imported into a country; typically collected at the country's border. As is the case with sales tax, duties are a one-time ad valorem tax based on the value of the goods imported.

Related Terms

Related Content

How to Make a Million Dollars in 10 Years
Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
March 26th, 2024
How to Apply Maslow’s Hierarchy to Your Money This Year
You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
March 27th, 2024
How to Tackle Multiple Savings Goals
When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
March 22nd, 2024
The Countdown to Early Retirement: 10 Expenses to Eliminate
Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
March 22nd, 2024
What’s Your One Page Financial Plan? Mapping out Your Future
“What’s your one page financial plan?” — This is the absolute best question that I’ve heard asked in a long time. Instead of talking about your hot stock pick or your fancy investment that shields you from paying taxes, I think it’s time for all of us to step back and ask ourselves the most intelligent question of all, “Why the heck do I care about money anyway??”
March 14th, 2024

Contributors

Moneyzine 2024. All Rights Reserved.