WHAT ARE PROPERTY (AD VALOREM) TAXES?
Property (Ad Valorem) taxes are taxes that are based on the value of real and/or personal property.
- Real property includes the land and improvements. An improvement is anything that adds value to real property such as a house, swimming pool, garage, barn, etc.
- Business personal property refers to items that are used in any business and are movable or not permanently fixed to the land. Some examples of personal property would be furniture, fixtures, tools, and equipment used in the operation of a business.
WHAT SHOULD I DO WHEN I BUY PROPERTY?
New property owners often rely on their title company, real estate agent, or other representative to properly record and assess their property. It is the responsibility of the new property owner to ensure that all necessary steps have been completed.
At a minimum, the following steps should be completed:
- Assess your property in the Revenue Commissioner's Office.
Claim any exemptions due to you.
- Make sure all of this is complete no later than December 31 for all property purchased prior to October 1, in order to receive a tax bill in your name for the next year.
- If your mortgage company has agreed to escrow and pay your property taxes, a copy of the assessment form should be mailed to the mortgage company as soon as it is received. This will give the mortgage company complete information to request a tax bill for your property.
- Make sure the taxes are current and paid on the purchased property.
- Report all address changes promptly.
WHAT SHOULD I DO IF I MAKE CHANGES TO MY PROPERTY?
If you make any changes to your property, you or your agent must come to the Revenue Commissioner's Office no later than December 31 to sign a new assessment officially reporting any improvements made or removal of structures or features from your property, prior to October 1 of that year.
Examples of improvements that are accessable would include new structures or additions, swimming pools, extensive repairs, remodeling, or renovations(such as adding a fireplace, extra bath, patio, deck, carport, garage, etc.). Items such as re-roofing, minor repairs and painting (normal maintenance) do not require reassessment.
DO I QUALIFY FOR HOMESTEAD EXEMPTION?
A homestead exemption is a tax break to which a property owner may be entitled, if they own a single-family residence and occupy it as their primary residence on the first day of the tax year (October 1) for which they are applying. (A homestead is defined as a single-family owner-occupied dwelling and the land thereto, not exceeding 160 acres).
- Homestead Exemption 1 (H1) is a standard exemption available to all residents of Alabama who own and occupy a single-family residence, including manufactured homes, as their primary residence and use this property for no other purposes. The exemption is up to $4,000 in assessed value for state taxes and up to $2,000 in assessed value for county taxes.
- Homestead Exemption 2 (H2) is a exemption for residents of Alabama 65 years of age or older with annual adjusted gross income less than $12,000 as reflected on their most recent State Income Tax Return OR who are retired due to permanent and total disability (regardless of age). The exemption is for the total assessed value of state taxes and $5,000 in assessed value on their primary residence and 160 acres adjacent thereto for county taxes.
- Homestead Exemption 3 (H3) is an exemption for residents of Alabama who are permanently and totally disabled (no income limit) OR who are age 65 or older with net taxable income of $12,000 or less on the combined (taxpayer and spouse) Federal Income Tax Return. Those who qualify are exempt from taxes on their primary residence and 160 acres adjacent thereto.
- Homestead Exemption 4 (H4) is an exemption for residents of Alabama 65 years of age or older with income greater than $12,000 on their most recent State income tax return. The exemption is for the total assessed value of state taxes and up to $2,000 in assessed value for county taxes.
HOW CAN I APPLY FOR A CURRENT USE EXEMPTION?
Owners of farmland, pasture land, or timberland that are producing agricultural products, livestock, or wood products for sale to the general public may apply for current use exemption. This exemption allows for property to be assessed at less than market value when used only for the purposes specified.
Any owner of eligible property must make a formal application to the Revenue Commissioner's Office if they wish to claim current use.
HOW TO APPLY FOR CURRENT USE
Current use applications may be obtained from the Revenue Commissioner's Office at any time of the year, but under the law they must be filed with the Revenue Commissioner's Office no later than December 31, for that tax year.
After current use has been granted, the owner who made application for current use does not have to reapply for current use in subsequent years. However, if the property ownership is transferred or the name is changed by deed or will, the new owner will have to file an application for current use, or their taxes will be based on fair market value rather than current use value.
HOW ARE PROPERTY VALUES DETERMINED?
The Revenue Commissioner is responsible for determining property value, which must, by law, be set according to “fair and reasonable market value.” Your property is probably not for sale but the county appraiser must set the value of the property as if it were “sold” in an “arms length” transaction between a “willing buyer and a willing seller, neither being under any pressure to buy or sell.”