Ad Valorem

A Latin legal term that stands for “according to value”, generally dealing with the billing of property tax.

Ad valorem can be described as the opposite of a specific tax. A specific tax is a tax based on the amount of items involved in the transaction, whereas an ad valorem tax is applied as a percentage of the amount of money being used in the trade. Although an ad valorem tax is usually charged at the time of the purchase, it’s not uncommon in Real Estate for an ad valorem tax to be applied each year that you own the property.

In the world of timeshares, ad valorem taxes are usually referring to the property taxes that are assessed on your timeshare ownership on an annual basis. All clubs treat paying this tax in different ways. Some vacation clubs have these tax liabilities built into their annual maintenance fees, and some others will require the owner to pay these fees separately. Either way, as the owner of a timeshare ownership, you will have some responsibility to pay taxes.

Also, in some points-based ownerships, tax liability can be averaged over the whole club, meaning every owner pays the exact same amount in taxes. Other clubs that are deeded weeks or points-based ownerships that utilize a deeded home resort will charge taxes based on where you own. This means the amount of taxes paid can vary from owner to owner, based on the tax liability in the state that their resort is located within. An example would be in HGVC, a Las Vegas property will have a lower tax cost than a property in Orlando due to Nevada charging less in taxes than Orlando.

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