Illinois Real Estate Exam Practice Question
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 $268,000 and the assessed value was $263,000. What will the buyer pay for one year property taxes if the tax rate is 2%?
Correct Answer: C
Rationale: To determine the annual property taxes, the assessed value of the home is used, not the purchase price or appraised value. In this case, the assessed value is $263,000. The property tax rate is 2%, so the calculation is:
$263,000 x 0.02 = $5,260.
Option A ($5,000) underestimates the taxes based on the assessed value. Option B ($4,000) is also too low and does not reflect the correct assessment. Option D ($5,360) overstates the taxes, likely miscalculating the rate or value. Thus, $5,260 accurately reflects the tax owed based on the assessed value and tax rate.
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