A Practice Question About Homestead Exemption
I think the best way you can study for the real estate licensing exam is to answer practice questions. Answering practice questions forces you to recall information from your memory in a way that other studying does not. So let’s do a practice question, shall we?
A person receives a homestead exemption of $50,000. Their tax rate is 24 mills. What is the assessed value of the home?
Many students immediately reach for their calculators when I show them this problem. I can’t blame them. When you see numbers, it looks like math. Once you think it through, though, you will realize that we won’t have quite enough information to do any math. In order to do math, we would need to know what the 24 mills pertained to. Is it the city and county tax rate? The school rate? All three added up? We don’t have that information, so the 24 mills is not useful.
But what we do know is that in order for the home to get a $50,000 exemption, the value of the home needs to be at least $75,000. If the property is worth less than $75,000, the exemption is somewhere between $25,000 and $49,999. We look at the choices and only one answer is more than $75,000. So the correct answer is D.
If you still don’t understand, and need more explanation, give me a call or sign up for my review class at Demetree School of Real Estate.
Please note that neither I, nor anyone in the Climer family, have any affiliation with Climer School of Real Estate. My father, Ron Climer, sold Climer School of Real Estate in 2014. You can find me at Demetree School of Real Estate.