In Bob's property tax scenario, with fair market value $190,000, assessed at 50%, tax rate $55 per $1,000 of assessed value, what is the annual property tax?

• A. $5,125
• B. $4,755
• C. $5,500
• D. $5,225

Answer: (D)

Property taxes are calculated by applying the tax rate per thousand to the property's assessed value. The assessed value is found by applying the assessment ratio to the fair market value.

Here, the fair market value is 190,000 and the assessment ratio is 50%, so the assessed value is 190,000 × 0.50 = 95,000. The tax rate is 55 dollars per each thousand dollars of assessed value, so you take 95,000 ÷ 1,000 = 95 units of thousand-dollar increments, then multiply by 55: 95 × 55 = 5,225.

So the annual property tax is 5,225. If you skip applying the 50% assessment ratio, you’d miscalculate and land on a different total, which explains why the correct approach uses the assessed value first.