PSI New Jersey Real Estate State Practice Exam

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What is the property tax amount a buyer will pay for one year if they purchased a home for $230,000, put down 20%, and have a property tax rate of 0.2%?

$460
$440
$4600
$220

The correct answer is: $460

To determine the property tax amount that a buyer will pay for one year on the purchased home, first, we need to understand how the property tax is calculated based on the home’s purchase price and the tax rate. In this scenario, the buyer is purchasing a home for $230,000 with a property tax rate of 0.2%. The tax is calculated on the full value of the property, not just the amount financed after the down payment. Here's the calculation step-by-step: 1. **Calculate the property tax**: Multiply the purchase price of the home by the property tax rate: \[ \text{Property Tax} = \text{Home Price} \times \text{Tax Rate} \] Therefore: \[ \text{Property Tax} = 230,000 \times 0.002 = 460 \] This means that the buyer would owe $460 for property taxes in the coming year. This understanding highlights that the property tax obligation does not depend on the down payment or financing terms; what matters is the assessed value of the property and the applicable tax rate.