New Jersey 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's property taxes if the tax rate is 2%?
Correct Answer: D
Rationale: To determine the property taxes, the assessed value of the home is used, which is $263,000. The tax rate is 2%, so the calculation for one year’s property taxes is as follows:
Property Taxes = Assessed Value × Tax Rate
Property Taxes = $263,000 × 0.02 = $5,260.
Thus, the buyer will pay $5,260 in property taxes for the year.
Option A ($5,000) underestimates the taxes based on the assessed value. Option B ($4,000) is too low and does not reflect the correct tax calculation. Option C ($6,260) mistakenly uses an inflated figure that exceeds the assessed value.
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