New Jersey Real Estate Practice Exam Free Practice Question
A house sale is being closed on August 1. The fair market value of the property is $144,000. The assessed value is 50% of fair market value, and the tax levy is 55 mills. What is the buyer's approximate prorated share of the tax?
Correct Answer: B
Rationale: To calculate the buyer's prorated share of the tax, first determine the assessed value, which is 50% of the fair market value: $144,000 x 0.50 = $72,000. Next, calculate the annual tax by multiplying the assessed value by the tax levy (in mills): $72,000 x 0.055 = $3,960. Since the sale closes on August 1, the buyer is responsible for 5 months of taxes (August to December), which is 5/12 of the annual tax: $3,960 x (5/12) = $1,650.
Option A is incorrect as it represents the buyer's share for a full year. Options C and D are incorrect as they exceed the calculated prorated amount.
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