Current market value is $255,000; assessed at 35% of market value with an equalization factor of 1.25. If the tax rate is $3.50 per $100 of assessed value, what is the amount of real estate tax due?

Current market value is $255,000; assessed at 35% of market value with an equalization factor of 1.25. If the tax rate is $3.50 per $100 of assessed value, what is the amount of real estate tax due?

• A. $3,904.69
• B. $3,500.00
• C. $3,700.00
• D. $4,100.00

Answer: (A)

Real estate taxes are computed from an equalized assessed value, which starts with the market value, then applies an assessment percentage, then an equalization factor, and finally uses the tax rate per $100 of assessed value. First, apply the assessment rate to the market value: 255,000 × 0.35 = 89,250. Then apply the equalization factor to bring assessments to statewide parity: 89,250 × 1.25 = 111,562.50. The tax rate is 3.50 per $100 of assessed value, so the tax is (111,562.50 / 100) × 3.50 = 1,115.625 × 3.50 = 3,904.6875. Rounding to the nearest cent gives $3,904.69.

Real estate taxes are computed from an equalized assessed value, which starts with the market value, then applies an assessment percentage, then an equalization factor, and finally uses the tax rate per $100 of assessed value.

First, apply the assessment rate to the market value: 255,000 × 0.35 = 89,250. Then apply the equalization factor to bring assessments to statewide parity: 89,250 × 1.25 = 111,562.50. The tax rate is 3.50 per $100 of assessed value, so the tax is (111,562.50 / 100) × 3.50 = 1,115.625 × 3.50 = 3,904.6875. Rounding to the nearest cent gives $3,904.69.