How is ad valorem property tax calculated?

Ad valorem property tax is calculated based on the assessed value of a property, which reflects its market value or worth, and then this value is multiplied by the local tax rate. This method ensures that the tax burden is proportionate to the value of the property owned. When a property is assessed, it is typically done at a certain percentage of its full market value, allowing for fluctuations in the market to be accounted for when determining taxes owed.

By multiplying the assessed value by the tax rate, property owners can determine how much tax they will owe. This approach aligns the taxation with the value of the property, ensuring that property owners contribute to public funding in a manner that correlates with their investment in real estate.

Other methods listed, such as calculating by total area, assessing improvements separately, or considering rental income, do not reflect the standard practices of ad valorem taxation. These methods do not take into account the overall valuation of the property or its market worth, which are central to determining ad valorem taxes.