Real Estate Math
A Minnesota property has an assessed value of $285,000. The homestead classification rate is 1.0% for the first $500,000. The city, county, and school district total tax rate is 1.5%. What is the annual property tax?
A$2,850
B$4,275✓ Correct
C$3,500
D$1,425
Explanation
Annual property tax = Assessed Value x Tax Rate = $285,000 x 0.015 = $4,275. In Minnesota, the homestead classification reduces the effective tax rate on the first $500,000 of value compared to non-homestead property. The tax capacity (taxable value) and rates are set by the state and local taxing authorities.
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