How Ad Valorem Taxes Work

Ad Valorem taxes are what people commonly know as property taxes. Property taxes in Corinth represent about half of the City's total revenues in any given fiscal year. You can see that knowing how ad valorem taxes work is important.

The actual tax levied on any single property is based on the appraised value of that property and the tax rate. If the tax rate stays the same from one year to the next, the actual tax levied goes up only if the property value goes up. Likewise if the property value goes down, the actual tax levied also goes down.

On the other hand, if the property value were to remain constant from year to year, the actual tax levied would only go up if the tax rate was increased. Similarly, if the tax rate was decreased the actual tax levied would also decrease.

Now a critical concept: if the property's value was to decrease 5% and the tax rate were to increase 5% the actual tax levied would remain the same. This is a crucial point to understanding how ad valorem taxation works, particularly with regards to Texas' truth in taxation laws.

Another critical component of ad valorem taxation, is what property value the rate is set on. At the start of this discussion, a single property is the subject of all the discussion. The property tax rate set by a city, county, or school district, is set on the aggregate value of all properties in the taxing jurisdiction. That is, the city did not evaluate your particular property in setting the tax rate, but rather all properties together. Your property value (remember, this is independent of the tax rate) is set by individual appraisal from an independent agency. All appraised properties are then added to create the aggregate appraised value for the entire city.

Thus it is possible for your individual property's appraised value to go up, even as the aggregate value for the entire city goes down (my home's appraised value went up this year, despite the fact that the aggregate value of the existing properties in the city went down). The tax rate, being set by the aggregate value of all property in the city, moves independently of any one persons appraised property value.

Corinth only sets the property tax rate; the appraised value of a property is set by the Denton Central Appraisal District. You can find out more about the appraisal process at the Denton CAD website. At their website you can also find out the appraised value of your property, as well as properties around you. It also has helpful directions on how to protest the appraised value of your property.

You can find more information about the ad valorem tax process at the state comptrollers website. The Comptroller has an entire section dedicated to ad valorem taxes (property taxes).