Ad Valorem Tax

What is an ad valorem tax?

An ad valorem tax is a tax based on the assessed value of real property. It is typically levied by local governments and not the HOA itself. It is used to fund services such as schools, roads, and emergency services.

Why is ad valorem tax important to HOAs?

While HOAs don’t assess or collect ad valorem taxes, rising property taxes can affect homeowners’ overall expenses and may influence their receptiveness to changes in dues or special assessments. Understanding the local tax environment helps boards make informed financial decisions and communicate with empathy.

How can you use “ad valorem tax” in a sentence?

With the ad valorem tax rate already climbing, we decided to hold off on proposing a dues increase this year.