56. The purchase price for a new home was $400,000. 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 $415,000 and the assessed value was $417,000. What will the buyer pay for one year's property taxes if the tax rate is 3.5%?
Answer: C
The buyer will pay $14,595 for one year's property taxes.
To calculate the annual property taxes, the assessed value of the home is used. With an assessed value of $417,000 and a tax rate of 3.5%, the property taxes are computed as $417,000 multiplied by 0.035, resulting in $14,595.
A) 14,000
This option is incorrect because it does not accurately reflect the calculation based on the assessed value of the property. A tax rate of 3.5% applied to the assessed value of $417,000 results in a higher tax amount than $14,000.
B) 11,200
This option is also incorrect. The calculation for property taxes based on the assessed value of $417,000 at a 3.5% tax rate yields a total of $14,595, significantly exceeding $11,200.
C) 14,595
This option is correct. The property tax is calculated by taking the assessed value of $417,000 and multiplying it by the tax rate of 3.5%, which results in an annual tax of $14,595.
D) 14,530
This choice is incorrect. While it is close to the correct answer, the calculation using the assessed value of $417,000 at a 3.5% tax rate does not result in $14,530, but rather $14,595.
Conclusion
The precise calculation of property taxes based on the assessed value confirms that $14,595 is the accurate amount due. All other options fail to reflect the correct multiplication of the assessed value by the tax rate, demonstrating a misunderstanding of the tax calculation process. Thus, option C is the only valid choice.