11. The purchase price for a new home was $250,000. 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 $261,000 and the assessed value was $266,000. What will the buyer pay for one year's property taxes if the tax rate is 4%?
Answer: C
The buyer will pay $10,640 for one year's property taxes.
To calculate the property taxes, the assessed value of the home is used, which is $266,000. With a tax rate of 4%, the annual property tax is calculated as 0.04 × $266,000, resulting in $10,640.
A) $10,000
This option is incorrect as it underestimates the property taxes. If the assessed value of $266,000 is multiplied by the tax rate of 4%, it yields $10,640, which is significantly higher than $10,000.
B) $8,000
This option is also incorrect because it is below the calculated property tax amount. The 4% tax applied to the assessed value of $266,000 results in $10,640, making $8,000 an inadequate figure.
C) $10,640
This option is correct. The annual property tax is derived from multiplying the assessed value of $266,000 by the tax rate of 4%, which gives exactly $10,640.
D) $10,440
This option is incorrect as it miscalculates the property taxes. The correct calculation of 4% on the assessed value of $266,000 results in $10,640, not $10,440.
Conclusion
The correct answer is $10,640, as it accurately reflects the annual property taxes based on the assessed value and tax rate. All other options either underestimate or miscalculate the tax amount, failing to align with the provided figures. Thus, $10,640 is the definitive amount the buyer will owe for property taxes.