71. The purchase price for a new home was $200,000. 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 $217,000 and the assessed value was $214,000. What will the buyer pay for one year's property taxes if the tax rate is 3%?
Answer: C
The buyer will pay $6,420 for one year's property taxes.
To calculate the property taxes, we apply the tax rate to the assessed value of the home. With an assessed value of $214,000 and a tax rate of 3%, the property taxes are calculated as $214,000 multiplied by 0.03, resulting in $6,420.
A) $6,000
This option is incorrect as it underestimates the property taxes. At a tax rate of 3%, applying it to the assessed value of $214,000 yields a total of $6,420, not $6,000. Therefore, this option does not reflect the accurate calculation based on the given assessed value.
B) $4,800
This option is also incorrect. To arrive at $4,800, one would need to assume a significantly lower assessed value or a different tax rate. The correct calculation using the assessed value of $214,000 clearly shows that the annual property taxes amount to $6,420, making this option invalid.
C) $6,420
This option is correct as it accurately reflects the property tax calculation based on the assessed value of the home. The calculation is straightforward: $214,000 multiplied by the tax rate of 3% equals $6,420. This aligns perfectly with the financial details provided in the question.
D) $6,510
This option is incorrect, as it slightly overestimates the property taxes. The correct calculation using the assessed value of $214,000 and a tax rate of 3% results in $6,420, which is less than the amount stated in this option. Therefore, it fails to present an accurate figure for the property tax due.
Conclusion
The correct answer is $6,420, calculated from the assessed value of $214,000 at a 3% tax rate. Options A, B, and D fail to accurately reflect the calculation based on the provided assessed value, while option C stands out as the only one that correctly computes the property taxes. Thus, option C is definitively the correct choice.