There are many unique characteristics attached to real estate or ad valorem law which greatly affect the value of land and the subsequent tax levied. The general characteristics for an individual's annual ad valorem tax can be split into two basic groups:economic characteristics and physical characteristics.
Each variable within these two groups will shift the assessed value of land and the amount of tax levied on a property owner. Real Estate, like most products have a value attached that fluctuates greatly based on physical and economic factors. The value of land is calculated based on a detailed formula; the assessment calculation will encompass such variables or characteristics on a piece of land or property.
The economic and physical characteristics that influence the assessment value of land and the subsequent ad valorem tax levied are scarcity, improvements made to the land, area preference, and permanence. Like all products, the value of a good will shift depending on its availability. The economic factors that go into the ad valorem tax are all dramatically connected.
The supply of land, like all things has a ceiling; more land cannot be magically produced or manufactured. The scarcity of land varies greatly based on geographic region or neighborhood. Less densely populated states will offer a prospective buyer more land than congested urban areas or states. The more densely populated a state is the more scarce the land becomes, thus making it more valuable and prone to higher ad valorem taxes.
The term scarcity as it pertains to the ad valorem tax can also be synonymous with demand. Pieces of property in desired neighborhoods will often times have a high demand. The perpetual demand is a result of factors like good schooling, wealthy area low crime etc. When the demand is constantly high, the supply of property is generally scarce. The high demand mixed in with a limited supply will generate higher ad valorem taxes; the same is also true when the variables are flipped, a low demand in a less densely populated market will yield lower ad valorem taxes.
Directly attached to scarcity is improvements or renovation made on the land. Dilapidated or run down areas are less likely to have renovated property than those areas which are highly sought after. Improvements made on one house of a neighborhood will not only effect the value of the refurbished home in question, but also of the surrounding homes, and the community as a whole. Renovations will increase a property's assessed value which will consequently increase the ad valorem tax.
That being said, improvements made to one's property are beneficial; they offer a landowner a substantial tax exemption, which in essence should more than offset the increased rate of taxes. Improvements also pertain to businesses entering a neighborhood-if a large corporation builds an office in a community the value of the neighborhood and the ad valorem tax will increase due to an influx of jobs or increased attraction.
Similar to renovations or appearance, permanence is also an economic characteristic that effects the ad valorem tax. The infrastructure of a building or piece of land is reviewed thoroughly during the assessment process. Homes or land in areas with limited utilities such as sewers, drainage, water, and electricity will be greatly devalued and decreasingly taxed. Areas that do offer these utilities, and are built from good materials will have a higher value and thus an increased ad valorem tax.
These above economic factors are all appropriately tied into area preference. The common cliche attached to real estate is "location, location, location." The value of a home will fluctuate greatly based on the location of the land, and how strongly it is desired. If you need legal advice and assistance, contact real estate lawyers.