Unlock Your Texas Property Tax Future 2026 – Ace the Consultant Exam with Confidence!

Ad valorem tax is a tax based on the assessed value of real estate or personal property, making it the correct choice. This type of tax is derived from the Latin term meaning "according to value," indicating that the amount owed is determined by the value of the property. Local governments commonly impose ad valorem taxes to fund essential services such as education, public safety, and infrastructure maintenance.

The assessed value is typically established by a tax assessor, who evaluates properties in order to determine their market value, which becomes the basis for tax calculations. This process ensures that property taxes reflect the current economic state and value of real estate or personal property.

In contrast, sales tax is levied on the sale of goods and services and is not based on the property value itself. A flat tax refers to a uniform tax rate applied to all income levels, and it does not pertain specifically to property values. Property transfer tax is assessed when real estate changes hands but does not reflect the ongoing assessment of property's value for taxation purposes.