Ad Valorem Tax





A tax based on an item’s assessed value like real estate or personal property is called as Ad Valorem Tax. The most common type of it are property taxes levied on real estate. However, it may also extend to a number of tax applications like that of import duty taxes on foreign goods.
“Ad valorem” means according to value in Latin. All of it is levied based on the determined value of the item that is being taxed. Ad valorem, in the most common application like municipal property taxes and real estate of property owners, is assessed periodically by a public tax assessor to determine its present value. To compute tax levied annually on a property owner by government entity or municipal, the assessed value of the property is used.
It is generally levied on personal and real. Real property includes buildings, land and other structures with any improvements made to the property. Personal property ad valorem taxes are most commonly levied on major personal properties like car and boat.


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