New Jersey Real Estate License Exam Practice Question
The purchase price for a new home was $325,000. 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 $340,000 and the assessed value was $343,000. What will the buyer pay for one year's property taxes if the tax rate is 3%?
Correct Answer: B
Rationale: To calculate the property taxes, first determine the assessed value of the home, which is $343,000. Property taxes are calculated based on this assessed value, not the purchase price or appraised value. The tax rate is 3%, so the annual property tax is calculated as follows:
\[
\text{Property Tax} = \text{Assessed Value} \times \text{Tax Rate}
\]
\[
= 343,000 \times 0.03 = 10,290
\]
Option A ($9,760) is incorrect as it appears to be a miscalculation of the tax rate or assessed value. Option C ($10,290) is incorrect because it doesn't correspond to the correct final answer. Option D ($10,200) is also incorrect as it underestimates the tax based on the assessed value.
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