Question

A seller's current real estate tax is $1,175 per year including the homeowner's exemption. The condo is sold to a buyer for $197,500. Assuming no local assessments are added to the tax bill, what will be the buyer's real property tax bill including the homeowner's exemption

Answer 1

Answer:

Home owner's exemption is not the same as homestead exemption. Depending on the state that you live, homestead can be up to $50,000 of the home's value, but homeowner's exemption is generally up to $7,000 only. This means that the buyer's basis will lower by $197,500 - $7,000 = $190,500.

Assuming that the real estate tax rate is 1%, then the new tax bill (including homeowner's exemption) would be $190,500 x 1% = $1,905.