Virginia State Real Estate Exam Practice Question
A tax assessor has determined that the fair market value of a property is $140,000. If the assessed value is 50% of fair market value and the tax levy is 42 mills, what are the annual taxes?
Correct Answer: B
Rationale: To determine the annual taxes, first calculate the assessed value, which is 50% of the fair market value of $140,000. This results in an assessed value of $70,000. Next, convert the tax levy of 42 mills into a decimal by dividing by 1,000, yielding 0.042. Multiply the assessed value by the tax rate: $70,000 x 0.042 = $2,940.
Option A ($667) underestimates the tax by not using the full assessed value. Option C ($1,667) and Option D ($2,940) miscalculate the application of the tax rate. Only option B ($1,176) correctly reflects the annual tax amount based on the assessed value and tax rate.
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