Question

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.

Answer 1

Calculation of Property Tax in Louisville

Assessment Rate of 100% on $125000 = $125000

Per $100 of assessed value = 125000 / 100 = $1250

Property Tax = $1.85 * 1250

= $2312.5

Calculation of Property Tax in Big Creek

Assessment Rate of 80% on $138000 = .80 * 138000

= $110400

Tax Rate = 21.6 mills

21.6 mills to dollars = 21.6 / 1000 = .0216

Thus Property Tax = .0216 * $110400

= $2384.64

Thus House in Big Creek has higher property tax of $2384.64

Difference = 2384.64 - 2312.5

= $72.14