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 use the assessed value of the home, which is $214,000, and apply the tax rate of 3%. This results in annual property taxes of $6,420.
A) $6,000
This option is incorrect because it represents a calculation based on a lower assessed value or incorrect tax rate. The proper calculation requires multiplying the assessed value of $214,000 by the tax rate of 3%, which gives a total of $6,420, not $6,000.
B) $4,800
This option is also incorrect as it suggests a significantly lower tax amount. To arrive at $4,800, one would have to assume a much lower assessed value or an erroneous tax rate. The accurate computation clearly shows that the taxes based on the assessed value of $214,000 and a 3% rate result in $6,420.
C) $6,420
This is the correct answer. By multiplying the assessed value of $214,000 by the tax rate of 3%, the total property tax for one year is calculated as $6,420, which accurately reflects the tax obligation for the buyer.
D) $6,510
This option is incorrect as it suggests a higher tax amount than what is calculated based on the assessed value. The calculation using the assessed value of $214,000 at a 3% tax rate does not support this figure, which exceeds the actual annual property tax of $6,420.
Conclusion
The correct answer is $6,420, derived from applying the 3% tax rate to the assessed value of $214,000. All other options miscalculate the tax amount either by using incorrect values or by erroneously interpreting the tax rate, thus failing to represent the buyer's actual property tax liability accurately.