Illinois Real Estate Exam Practice Question
The purchase price for a new home was $276,000. 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 $285,000 and the assessed value was $289,000. What will the buyer pay for one year’s property taxes if the tax rate is 3%?
Correct Answer: C
Rationale: To determine the property taxes, the assessed value of the home is used, which is $289,000. The tax rate is 3%, so the calculation for the annual property tax is as follows:
Property Tax = Assessed Value × Tax Rate
Property Tax = $289,000 × 0.03 = $8,670.
Option A ($8,250) miscalculates the tax by using a lower assessed value or an incorrect rate. Option B ($6,600) likely results from using the purchase price instead of the assessed value. Option D ($8,550) may arise from a miscalculation of the percentage. Only option C accurately reflects the correct computation based on the assessed value and tax rate.
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