Real Estate Math
A property in Gary, Indiana is assessed at $110,000. The county equalization factor is 1.25 and the tax rate is 2.4%. What is the annual property tax?
A$2,640
B$3,300✓ Correct
C$3,600
D$4,125
Explanation
Equalized value = $110,000 × 1.25 = $137,500.
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Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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