The Calculation of Annual Ad Valorem Taxes
Understanding Ad Valorem Taxes
Ad Valorem Taxes are taxes that are calculated based on the value of a property, such as real estate or personal property. These taxes are typically expressed as a percentage of the assessed value of the property. In this case, we will calculate the annual ad valorem taxes for a house with a market value of $500,000.
Given Information
Market value: $500,000
Assessment rate: 30%
Equalization Factor: 1.25
Tax rate: 70 mills
Calculation of Annual Ad Valorem Taxes
Assessed value = Market value × Assessment rate
= $500,000 × 0.30
= $150,000
The annual ad valorem tax = Assessed value × Equalization Factor × Tax rate
= $150,000 × 1.25 × 0.07
= $13,125
Conclusion
Therefore, the annual ad valorem taxes for a house with a market value of $500,000, an assessment rate of 30%, an equalization factor of 1.25, and a tax rate of 70 mills would amount to $13,125.
What are the annual ad valorem taxes?
Answer:
$13,125
Explanation:
Given:
Market value = $500,000
Assessment rate = 30% = 0.30
Equalization Factor = 1.25
Tax rate = 70 mils = 0.07
Computation of The annual ad valorem tax:
Assessed value = Market value × Assessment rate
= $500,000 × 0.30
= $150,000
The annual ad valorem tax = Assessed value × Equalization Factor × Tax rate
= $150,000 × 1.25 × 0.07
= $13,125