Florida Real Estate Sales Associate Examination Content OutlineReal Estate Property and OwnershipHard
A commercial property owner is appealing their property tax assessment, believing the county appraiser has overvalued their property. The property was recently purchased for $1,200,000, but the county's assessed value is $1,500,000. If the local millage rate is 20 mills and the owner qualifies for a $50,000 homestead exemption (though this is a commercial property), what is the annual property tax liability based on the county's assessment, assuming no other exemptions apply?
- A$30,500
- B$29,000
- C$30,000
- D$24,000
Show answer & explanationAnswer & explanation
Correct answer: C. $30,000
First, calculate the taxable value: Assessed Value - Exemptions. Since it's a commercial property, the homestead exemption does not apply. So, Taxable Value = $1,500,000. Next, convert the millage rate to a decimal: 20 mills = $0.020. Finally, multiply the taxable value by the millage rate: $1,500,000 * $0.020 = $30,000.
Why the other options are wrong
- A. Incorrect. This calculation does not align with typical tax computations.
- B. Incorrect. This would be if a $50,000 exemption was incorrectly applied: ($1,500,000 - $50,000) * 0.020 = $29,000.
- D. Incorrect. This would be 20 mills on $1,200,000 (purchase price) or if the taxable value was $1,200,000.
Property Tax Calculation
Annual property tax liability is calculated by multiplying the taxable value of a property by the applicable millage rate.
- Taxable Value = Assessed Value - Exemptions.
- Millage rate is expressed as dollars per $1,000 of value, or mills (1 mill = $0.001).
- Homestead exemption typically applies only to residential owner-occupied properties, not commercial.
Memory trick: ASSESS, EXEMPT, then MILL to pay the BILL.