These two terms combined are often referred to as “property tax”, however each of these taxes has a distinct purpose and varying periods to which they apply.

Let’s get right to it. The phrase Ad Valorem translates to “according to the value”, which as you might guess is referring to the value of the property.  This is the portion of the property tax that correlates to the assessed value of a property. Ad valorem tax is assessed annually and is based off of a calendar year (1/1-12/31). This tax amount will change based on changes in the assessed value of a particular property and the millage rate for a specific county. At closing you will see either a debit or credit adjustment that will run from the 1st of the year through the date of closing or from the closing date to the end of the year (depending on who is reimbursing who in the transaction).

Alternatively, Non-Ad Valorem tax is a tax that is generally assessed equally amongst every property owner within a region (typically within a municipality) regardless of the size or value of property. This portion of property tax is assessed for varying services depending on the municipality where a property is located, but generally will include items such as fire rescue, sewer/drainage, etc… Non-Ad Valorem taxes in a majority of municipalities in South Florida are assessed from 10/1-9/30 rather than on the same calendar year as Ad-Valorem.

While these combined taxes have two different assessed periods the due date for payment of the taxes remains the same for both as they are billed together and discounts apply based on the same payment schedule (4% prior to 12/1, 3% prior to 1/1, 2% prior to 2/1, 1% prior to 3/1 and no discount after 3/1).

Because Non-Ad Valorem taxes are assessed from 10/1-9/30, you may see that a Buyer is giving a Seller credit from the date of closing through 9/30 whereas they are receiving a credit for Ad-Valorem taxes from 1/1-date of closing.  This does create some confusion, but just remember they are separate taxes, billed together with different time periods of assessment. You should always feel comfortable reaching out to your closing agent/title company to explain how they handled prorations/adjustments for these taxes.