Ad valorem taxation, in relation to real estate property, is referring to property taxes that are levied by a local municipality and/or county. Property is assessed as of the beginning of each year to determine a “fair market” value. Ad valorem means, “according to value.” Therefore, ad valorem taxes in real estate are property taxes based on a percentage of the assessed fair market value of the property before any applicable exemptions. These taxes are what help pay for various public interest line items in the local budget, such as schools, libraries, and hospitals. Many factors go into determining the fair market value and how available exemptions are applied, often leaving room for error that will cost property owners who don’t appeal an inequitable assessment.