Question

The City of Weston is preparing its budget for calendar year 2013. After estimating revenues from all other sources, the City calculates that it must raise $7,000,000 from property taxes. You are given the following information regarding the tax rate:

            Property taxes to be collected                                    $7,000,000

            Estimated uncollectible property taxes                           $70,707

            Total assessed value of property at beginning of 2013 $65,000,000

            Expected reduction in assessed value from appeals     $200,000

            Assessed value of City property, not subject to tax $1,400,000

            Adjustments to assessed values for senior citizen exemptions $1,000,000

            a.         Compute the gross amount of property taxes required to be levied.

b.         Compute the tax rate per $100 of net assessed valuation.

c.         Determine the amount of property tax that a home owner whose property is assessed at $35,000 will have to pay.

Answer 1

Answer :

(a).

Amount of Property Taxes to be levied are calculated as follows:

Property taxes to be collected = $7,000,000

Add: Estimated uncollectible property taxes = $70,707

Amount of property taxes required to be levied = $7,070,707

(b).

Calculation of Net Assessable Value :

Total assessed value of property at beginning of 2020 = $65,000,000

Less: Expected reduction in assessed value from appeals = $200,000

Less: Assessed value of City property, not subject to tax = $1,400,000

Less: Adjustments to assessed values for senior citizen exemptions = $1,000,000

Net Assessable Value = $62,400,000

Tax Rate per $100 of net assessed valuation

= 7,070,707*100/62,400,000

= $11.3313%

(c).

The amount of property tax that a home owner whose property is assessed at $35,000 will have to pay = 35,000*11.3313% = $3,966