245,398 views
32 votes
32 votes
The Franklin Family wants to buy a home. They narrowed the choice down to a $125,000 home in Louisville and a $138,000 home in Big Creek. With regard to property taxes, Louisville has an assessment rate of 100% and a tax rate of $1.85 per $100 of assessed value, while Big Creek has an 80% assessment rate and a tax rate of 21.6 mills. Determine which house has the higher property tax, and by how much? Round to the nearest cent.

User ChristianM
by
2.5k points

1 Answer

14 votes
14 votes

Answer:

  • Louisville: $2312.50
  • Big Creek: $2384.64, higher by $72.14

Explanation:

You want to compare the tax amounts on homes with ...

  • value = $125,000, 100% assessment rate, $1.85/100 tax rate
  • value = $138,000, 80% assessment rate, $21.6/1000 tax rate

Tax

The property tax is the product of the value, assessment rate, and tax rate.

Louisville

property tax = ($125,000)(1.00)(0.0185) = $2312.50

Big Creek

property tax = ($138,000)(0.80)(0.0216) = $2384.64

Comparison

The house in Big Creek has the higher property tax by ...

$2384.64 -2312.50 = $72.14

User Deighton
by
2.9k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.