What is the annual real estate tax on a property that is valued at $135,000 and assessed for tax purposes at $47,250 with an equalization factor of 125 percent, when the tax rate is 25 mills?

What is the annual real estate tax on a property that is valued at $135,000 and assessed for tax purposes at $47,250 with an equalization factor of 125 percent, when the tax rate is 25 mills?

• A. $1,477
• B. $1,450
• C. $1,500
• D. $1,430

Answer: (A)

In real estate tax calculations, the tax base is the equalized value, not the market value. You adjust the assessed value by the equalization factor to get that base, then apply the tax rate expressed in mills (dollars per thousand of value). First, convert the assessed value to equalized value: 47,250 × 1.25 = 59,062.50 Next, apply the tax rate in mills. Since 25 mills means $25 per $1,000 of value, the tax is: (59,062.50 / 1,000) × 25 = 59.0625 × 25 = 1,476.56 Rounded to the nearest dollar, the annual real estate tax is $1,477. The result matches the provided option when rounded.

In real estate tax calculations, the tax base is the equalized value, not the market value. You adjust the assessed value by the equalization factor to get that base, then apply the tax rate expressed in mills (dollars per thousand of value).

First, convert the assessed value to equalized value:

47,250 × 1.25 = 59,062.50

Next, apply the tax rate in mills. Since 25 mills means $25 per $1,000 of value, the tax is:

(59,062.50 / 1,000) × 25 = 59.0625 × 25 = 1,476.56

Rounded to the nearest dollar, the annual real estate tax is $1,477. The result matches the provided option when rounded.