Pages 148 - 149. Replace the section entitled “Ad Valorem Property Tax Appraisals” with the following:

Ad Valorem Property Tax Appraisals

Ad valorem is a Latin term meaning “according to value.” An ad-valorem tax is a tax based on the value of real estate or personal property and is a major source of revenues for state and municipal governments. Ad valorem taxes are incurred through ownership of an asset, in contrast to transactional taxes such as sales taxes which are incurred only at the time of transaction. For ad valorem taxation, personal property is taxed based on its "taxable value" as of January 1st of each year.
Jurisdictions often tax two types of personal property: business (commercial) personal property and, in some instances, private personal property such as automobiles, boats and airplanes.

• For commercial property, taxable value is based on the property's acquisition cost which is calculated by making use of valuation schedules that identify various types of personal property and provide a “percent good” of acquisition cost for commercial personal property. Acquisition cost is defined as all costs required to put an item into service. In addition to the cost of the item, acquisition cost could include shipping and installation costs, taxes, and any other cost related to putting the business personal property into service.

• Similarly, private personal property such as registered motor vehicles, recreational vehicles and aircraft may be subject to an annual ad valorem tax as well. Various schedules and bluebooks are used to determine the taxable value of private personal property.

Ad valorem appraisals are “mass” appraisals that often make use of governmental assessors, computer models, and schedules, guidelines and techniques adopted within their respective jurisdictions. Appraisals for ad valorem tax purposes are not typically done by the personal property appraiser as is the focus of this course. Accordingly, the topic of ad valorem taxation appraisals will not be covered beyond this short introduction. For more information on appraisals for ad valorem taxation purposes, contact your state property tax division.