400 Chapter 9 Taxes
We should have:(25%)(Market Value) $53,502
To fi nd the market value, we can divide both sides by 25% (i.e., by 0.25):__________________(0.25)(Market Value)
0.25 $53,502________
0.25
Market Value $214,008Calculating Real Estate Taxes on a Property
The tax rate may be expressed in a number of different equivalent ways. It may be expressed
as a rate per thousand. As the name suggests, a rate per thousand is simply the dollar
amount of tax per thousand dollars of assessed value. For example, if the real estate tax rate
in the Waterfield Central School District is $22 per thousand, the tax on a property assessed
at $100,000 would be ($22 per thousand)(100 thousands) $2,200.
Mills are an equivalent way of expressing a rate per thousand. A mill is 1/1,000 of a
dollar, or 1/10 of a cent. (The name comes from the Latin word mille meaning thousand.)
Rather than saying that the Waterfield Central School District (CSD) tax rate is $22 per
thousand, we could equivalently say it is 22 mills. (It is understood that these mills are a
rate per dollar, so we do not normally say “22 mills per dollar.”) Either way, the amount of
tax is expressed in a way that is based on 1/1,000 of the assessed value.
In theory, using a 22-mill rate, we would calculate the tax on a $100,000 assessed prop-
erty value as ($0.022 per dollar)($100,000) $2,200. In practice, however, we can just
read “mills” as “dollars per thousand” While technically speaking this is not exactly the
same as calculating the rates per thousand, in practice the result is the same. Therefore,
we could also have done this in the same way as we did when it was stated as a rate per
thousand: ($22 per thousand)(100 thousands) $2,200.
A tax rate may also be expressed as a rate per hundred. This is a bit less convenient than a
rate per thousand, but it works in much the same way. Waterfield CSD could equally well express
its tax rate as $2.20 per hundred—1/10 the per thousand rate since there are 10 hundreds in each
thousand. Using this rate, we would find that an assessed value of $100,000 is $100,000/100
1,000 hundreds of assessed value [($2.20 per hundred)(1,000 hundreds) $2,200].
Using a rate per hundred may seem awkward, but there is an equivalent way of expressing a
rate per hundred that may seem much more familiar. The Latin word for hundred is centum—
which is also the origin of the English word percent. The $2.20 per hundred can be equivalently
expressed as 2.2%. Using this form of the rate, we would calculate the tax as (2.2%)($100,000)
$2,200. Just as with mills versus rate per thousand, even though rate per hundred is not techni-
cally exactly the same as percent, in practice “rate per hundred” can be read as “percent.”
Before moving on to an example, let’s summarize this discussion:If the Tax Rate is Expressed as: Calculate the Property Tax by:Rate per thousand • Divide assessed value by 1,000- Multiply by the rate per thousand
Mills • Treat mills the same as a rate per thousand - Divide assessed value by 1,000
- Multiply by the rate per thousand
Percent • Multiply the percent by the assessed value
Rate per hundred • Treat the rate per hundred as a percent - Multiply the percent by the assessed value
Example 9.3.3 Josh’s house has an assessed value of $75,372. He pays real estate
taxes to his county, town, and school district. The county rate is 14 mills, the town rate
is $8.57 per thousand, and the school district rate is $1.35 per hundred. How much
does he pay to each of these, and how much does he pay in total?