Question

55. Use the effective tax rate method to calculate the property tax on a $112,500 home. The assessment rate is 43%. The property tax rate is$32.89 per $1,000 of assessed value. Round the effective tax rate to threeplaces. What is the property tax?

Answer 1

Let's begin by listing out the given information:

Home (Property Value) = $112,500

Assessment rate = 43% = 0.43

Property tax rate = $32.89 per $1,000 of assessed value

The Property tax is calculated using the formula:

`\begin{gathered} AssessedValue=112,500*0.43=48,375 \\ PropertyTax=(32.89)/(1,000)*48,375=1591.05375\approx1591.05 \\ PropertyTax=\text{ \$}1591.05 \end{gathered}`

The effective tax is calculated using the formula:

`\begin{gathered} ETR=(TaxesPaid)/(TaxableIncome) \\ ETR=(PropertyTax)/(AssessedValue)=(1591.05)/(48,375)=0.0329 \\ ETR=0.0329=3.29\text{ \%} \\ ETR=3.29\text{ \%} \end{gathered}`