In one state, the transfer tax is $0.80 per $500 or fraction thereof. There is no tax charged on the first $500 of the price. What tax must the seller pay if the property sells for $329,650?
A) $525.60
B) $526.40
C) $528.00
D) $527.20
Answer (2)
Subtract the initial $500 from the selling price: $329,650 - $500 = 329 , 150 .
Divide the taxable amount by 500 : \frac{329,150}{500} = 658.3$.
Round up to the nearest whole number: ⌈ 658.3 ⌉ = 659 .
Multiply by the tax rate: 659 × 0.80 = 527.20 . The transfer tax is $\boxed{ 527.20} .
Explanation
Understanding the Problem Let's break down this problem step by step to figure out the transfer tax the seller needs to pay. The transfer tax is based on the selling price of the property, but there's a twist: the first $500 is tax-free, and the tax applies to every $500 (or part of $500) after that.
Calculating the Taxable Amount First, we need to figure out the taxable amount. Since the first 500 i s n ′ tt a x e d , w es u b t r a c tt ha t f ro m t h e t o t a l se ll in g p r i ce : 329 , 650 − 500 = 329 , 150 $
Finding the Number of $500 Increments Now, we need to determine how many $500 increments are in the taxable amount ($329,150). To do this, we divide the taxable amount by 500 : 500 329 , 150 = 658.3 $
Rounding Up to the Nearest Whole Increment Since the tax applies to any fraction of 500 , w e n ee d t oro u n d t h e n u mb ero f in cre m e n t s u pt o t h e n e a res tw h o l e n u mb er . I n t hi sc a se , 658.3 ro u n d s u pt o 659. ⌈ 658.3 ⌉ = 659 $
This means there are 659 taxable increments.
Calculating the Total Tax Finally, we multiply the number of taxable increments (659) by the tax rate per increment ( 0.80 ) t o f in d t h e t o t a lt a x : 659 × 0.80 = 527.20 $
Final Answer Therefore, the seller must pay a transfer tax of $527.20.
Examples
Imagine you're selling a house and need to understand all the associated costs, including transfer taxes. This type of calculation is essential in real estate transactions to accurately determine the financial obligations of both the buyer and the seller. Understanding how transfer taxes are calculated ensures transparency and helps in budgeting for the sale or purchase of a property. This knowledge is also useful in other scenarios where taxes or fees are calculated based on incremental values or tiered systems, such as income tax or usage-based billing.
The seller must pay a transfer tax of $527.20 when the property sells for $329,650. This is calculated by subtracting the first $500, finding the number of $500 increments in the remaining amount, and multiplying by the tax rate. Therefore, the correct answer is D) $527.20.
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