What is ad valorem tax based on?

Ad valorem tax refers to a tax based on the assessed value of real estate property. This type of tax is levied as a percentage of the property's value, which is determined by a local government assessor. The assessment reflects various factors, including the property's market value, location, and any improvements made. This ensures that property owners are taxed in accordance with the value of their property, making it a fair system for funding local services and amenities.

In contrast, other options do not accurately describe the basis for ad valorem taxes. Income does not determine property tax liabilities, nor does the condition of the property directly influence the ad valorem tax rate. Sales prices from recent transactions may inform property assessments but are not the sole basis for the tax itself. Therefore, relying on the assessed value of real estate property aptly captures the essence of what ad valorem taxes are based on.