1. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 1 Chapter 13 Taxes and Insurance Section 1 Property Tax

2. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 2 Objectives 1.Define fair market value and assessed value. 2.Find the tax rate. 3.Find the property tax. 4.Express tax rate in percent, in dollars per $100, in dollars per $1000, and in mills. 5.Find taxes given the assessed value and the tax rate.

3. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 3 Define Fair Market Value and Assessed Value Fair market value – price at which property can reasonably be expected to sell Assessment rate –rate by which property is multiplied to find assessed rate Assessed value – equals fair market value multiplied by assessment rate

4. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 4 Example Page 521 Quick Check 1

5. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 5 Find the Tax Rate A taxing authority such as a city or community college district first estimates the revenue needed and then finds the property-tax rate needed to generate that amount of tax as follows.

6. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 6 Finding the Property-Tax Rate Step 1Identify the amount of money needed. Step 2Find the total fair market value of all real properties in the area. Step 3Find the total assessed value of all real properties in the area. Step 4

7. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 7 Example Page 524 Problem 11

8. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 8 Finding the Property Tax The tax rate is applied to the assessed value to find the property tax due as follows. Tax = Tax rate × Assessed value

9. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 9 Express Tax Rate in Dollars per $100 Some areas express tax rates as a number of dollars per $100. For an assessed value of $56,300 and a tax rate of $11.42 per $100 of assessed value find taxes as follows. $56,300 ÷ 100 = 563 hundreds Tax = 563 × $11.42 = $6429.46

10. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 10 Express Tax Rate in Dollars per $1000 Some areas express tax rates as a number of dollars per $1000. For an assessed value of $197,000 and a tax rate of $98.12 per $1000 of assessed value find taxes as follows. $197,700 ÷ 1000 = 197 thousands Tax = $98.12 × 197 = $19,329.64

11. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 11 Express Tax Rate in Mills Some areas express tax rates in mills or one- thousandths of a dollar. Divide the mills by 1000 to find the per dollar assessed value. For a tax rate of 46 mills, the tax on a house assessed at $81,000 is found as follows. 46 mills ÷ 1000 =.046 Tax =.046 × $81,000 = $3726

12. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 12 Tax Rates The following chart shows equivalent tax rates written in the four different systems.

13. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 13 Find Taxes Given the Assessed Value and the Tax Rate Property taxes are found by multiplying the tax rate by the assessed value.

14. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 14 Example Page 524 Problem 15, 21