Last Updated on February 23, 2024 by Amrita
When it comes to property taxes, most people are familiar with Ad Valorem taxes – the ones calculated based on property value and millage rates. However, there is another type of tax that often appears on property tax bills known as Non Ad Valorem tax. In this article, I will share what exactly a Non-Ad Valorem tax is, how it differs from Ad Valorem taxes, and its implications for property owners.
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What Is A Non Ad Valorem Tax?
A Non-Ad Valorem tax is a charge or fee imposed on a property to cover the costs of specific services or benefits provided by a governmental authority. Unlike ad valorem taxes, which are based on property value and millage rates, non-ad valorem taxes are determined by the project costs and benefits provided to a property.
Some common examples of services covered by Non-Ad Valorem taxes include waste collection and disposal, sewer, lighting, fire protection, or ambulance services.
How Does It Differ From Ad Valorem Taxes?
Ad Valorem tax and Non-Ad Valorem assessment are two different types of taxes that are usually included in the property tax bill as we already know from the above discussion. While they may seem similar at first glance, there are significant differences between these two types of taxes.
Ad Valorem Taxes are calculated based on the value of the property and millage rates, while Non-Ad Valorem Assessments are charges or fees for specific services or benefits provided to a property.
This means that Ad Valorem Taxes are based on the overall value of the property, while Non-Ad Valorem Assessments are based on the costs and benefits associated with a particular project or service.
Furthermore, unlike Ad Valorem Taxes which are distributed evenly among all properties in a taxing district, Non Ad-Valorem Assessments are directly assigned to the benefiting the specific property.
This ensures that only those properties that benefit directly will be charged for it, rather than imposing an extra burden on all properties within the district.
Billing And Payment
While Non-Ad Valorem assessments are not technically considered taxes, they are still included on property tax bills alongside Ad Valorem taxes. This means that when you receive your property tax bill, it will list both an Ad Valorem tax and a Non-Ad Valorem assessment. Both of these amounts are due on November 1st each year, to take advantage of the 4% discount.
It’s important to note that Non-Ad Valorem assessments are paid in advance, while ad valorem taxes are paid in arrears. This means that Non-Ad Valorem assessments cover a specific time, such as a fiscal year or calendar year, while Ad Valorem taxes are based on the previous year’s property value.
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Implications For Property Owners
The most significant impact of non ad valorem taxes on property owners is that they are assigned directly to benefitting properties, rather than all properties in a taxing district. This means that if you own a property that benefits from specific services or benefits covered by Non-Ad Valorem taxes, you will be responsible for paying those assessments even if the property is sold.
On the other hand, Ad Valorem taxes are tied to the property owner rather than the property itself. This means that when a property is sold, the new owner assumes responsibility for any outstanding Ad Valorem taxes.
Who Pays Ad Valorem Tax?
The Ad Valorem tax is paid by property owners on various types of real estate such as homes, land, and commercial properties. This locally assessed tax is based on the value of the property being taxed and is used to fund a variety of local government units including school districts, cities, counties, and community colleges.
The amount paid in property taxes varies depending on the value of the property and the tax rate set by each local government unit. The property owners are responsible for paying these taxes annually, with the funds collected being used to support essential services and infrastructure within their communities.
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Conclusion
In summary, Non-Ad Valorem taxes are charges or fees imposed on a property to cover the costs of specific services or benefits provided by a governmental authority. They differ from ad valorem taxes in terms of how they are calculated and who is responsible for paying them.
As a property owner, it’s important to understand both types of taxes and their implications for your property tax bill. So, make sure to pay attention to both ad valorem taxes and Non-Ad Valorem assessments when reviewing your annual property tax bill. With this knowledge, you can better manage your finances and ensure you are not missing any important payments.
