What must an ad valorem tax be based on?

An ad valorem tax is primarily based on the assessed value of property. This type of tax is commonly used in real estate to determine how much property tax an owner owes to the government. The assessed value is a percentage of the property's market value, which is determined by local tax assessors.

The rationale behind using assessed property value is that it provides a consistent method of taxation that reflects the value of the property ownership based on established criteria. These assessments are periodically reviewed and adjusted to account for changes in the market or property improvements, ensuring that the tax collected corresponds to the actual value of the property.

While market sales and approved tax rates can influence how much tax an individual property owner pays, they do not form the basis of the ad valorem tax itself. Additionally, local government needs may guide spending and budgeting but do not directly impact the calculation of the tax rate based on property value. Thus, focusing on assessed property value allows for a fair and transparent means of taxation for property owners within a jurisdiction.