The purchase price for a new home was $276,000. The buyer put down 20% and the balance was a mortgage for 80% of the purchase price. The appraised value at the time of closing was $285,000 and the assessed value was $289,000. What will the buyer pay for one year's property taxes if the tax rate is 3%?

Rationale

$8,670 will be the buyer's payment for one year’s property taxes.

To calculate the property taxes, we multiply the assessed value of the home by the tax rate. The assessed value is $289,000, and with a tax rate of 3%, the annual property tax amounts to $289,000 x 0.03 = $8,670.

A ($8,250) YOUR ANSWER

This option represents a tax amount that is calculated using a lower assessed value or tax rate. Specifically, $8,250 would suggest an assessed value of approximately $275,000 at a 3% tax rate, which does not reflect the provided assessed value of $289,000.

B ($6,600) YOUR ANSWER

This figure would correspond to an effective tax rate of roughly 2.28% on the assessed value of $289,000. Given the stated tax rate of 3%, this calculation does not align with the correct assessment and thus results in an incorrect tax amount.

C ($8,670) CORRECT

This is the correct answer, calculated directly from the assessed value of $289,000 multiplied by the tax rate of 3%, resulting in $8,670 in property taxes for the year.

D ($8,550) YOUR ANSWER

To arrive at $8,550, one would need to calculate using an incorrect assessed value of $285,000 at a 3% tax rate, which results in $8,550. The actual assessed value of $289,000 is the basis for the correct tax calculation.

Conclusion

In summary, the annual property taxes for the buyer are derived from the assessed value of the home, multiplied by the tax rate. Given the assessed value of $289,000 and a tax rate of 3%, the total property tax owed amounts to $8,670. All other options reflect incorrect calculations based on erroneous assumptions or values, reinforcing that accuracy in these figures is essential for determining property taxes.

$8,670 will be the buyer's payment for one year’s property taxes.

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