PROPERTY TAX

Ad Valorem Tax
In one form or another, the collection of property tax has served as a source of revenue for state and local governments since colonial times.  In Alabama, the property tax is a major source of local revenue with public education being the primary beneficiary.

Property (or ad valorem) taxes are levied based on the "fair and reasonable market value" of the subject or the property being taxed.  Alabama taxes both real and business personal property. Ad Valorem is a Latin phrase which means  "According to Value.

Real property generally includes land and permanently affixed improvements to the land.  Personal property (or personalty) refers to items which are movable or not permanently affixed to the land.  Business personal property refers to furniture, fixtures, tools, vehicles, and equipment used in the operation of a business.  Airplanes and corporate shares of stock are also considered personal property.
In Alabama,

October 1st is the"law or lien"date when ad valorem (property) taxes are in arrears. 

Alabama is one of only nine states which classes property.(1)  Property fits into one of four classes for taxation in the State of Alabama.  Each county assessing official is responsible for estimating fair and reasonable market value, subject to review by the taxpayer, the board of equalization, and the Alabama Department of Revenue.  The responsibility for administration of the property tax is presently supervised by the State and administered by officials at the local level.  Title 40 of the Code of Alabama - 1975 concerns Revenue and Taxation and is generally the source of authority and responsibility for the property tax.

(1) Alabama Property Tax Administration Revisited, 1994; Ward, Keith J & Pippin, Tracy A; Auburn University CGS.



Property Classes and Rates of Taxation

Class

Description

Assessment Rate

I

All property of utilities used in
the business of such utilities

30% 

II

All property not otherwise classified

 20%

III

All agricultural, forest, and single family owner-occupied residential and historic buildings and sites

 10%

IV

All agricultural, forest, and single family owner-occupied residential and historic buildings and sites

15%