🔍

Real Estate Math Video #5 - How To Calculate Real Estate Taxes | Real Estate Exam Prep Videos - YouTube

Channel: The Real Estate Classroom

[0]

[Music]

[11]

hey everyone my name is Paul the chess

[13]

key welcome to the real estate classroom

[15]

youtube channel it's just a place for

[17]

people that are taken or studying for

[19]

their real estate exam can get some

[20]

information to help them pass that exam

[23]

hey before we get started do me a favor

[25]

if you would give this video a thumbs up

[27]

hit that little red subscribe button and

[29]

click that little notification bell

[30]

alright so okay so a common question

[34]

that students will have on their real

[35]

estate licensing exam is how to

[37]

calculate property taxes now there are

[41]

two ways to calculate property taxes for

[45]

in so far as the real estate exam goes

[47]

so the first one is using what we call

[50]

the mill levy now the mill levy approach

[52]

to calculating property tax is relevant

[56]

when there's more than one government

[58]

agency that has access to levying or

[60]

assessing taxes on real property for

[63]

example here in Nebraska we have over 11

[66]

different agencies that have access or

[68]

they tap into taxing property for

[71]

revenue now in those jurisdictions where

[74]

there's typically only one government

[75]

agency then will they typically use the

[78]

the dollar value method and I'm going to

[80]

show you how to do that at the end of

[82]

this video the first thing we're gonna

[83]

do though is tackle the mill levy

[85]

approach now you need three out of four

[88]

items for you to successfully calculate

[91]

property taxes that are owed based on

[94]

the mill of your using the mill levy

[96]

method now the test question the

[100]

licensing exam will always give you at

[103]

least three out of the four so you can

[105]

make the calculations now I've had some

[108]

students say they've actually given them

[109]

all four so you have to be prepared now

[112]

with any math problem including this one

[116]

you have to know the process then you

[119]

have to commit that process to memory

[120]

because if you know the process or in

[123]

high school or high school math teachers

[124]

used to call them formulas so if you

[127]

know the formula then all you have to do

[128]

is know where to plug in the numbers you

[130]

can always get the right answer so we

[132]

have to calculate

[133]

this to memory alright so let's take a

[137]

look at a sample problem and I'll show

[138]

you how to calculate taxes 1621 Pacific

[143]

Street has an appraised value of two

[145]

hundred thousand dollars the county

[147]

taxes real property at 50% of the

[151]

appraised value value the mill levy is

[155]

decimal zero one zero calculate the

[158]

taxes owed alright so in our example

[161]

here we have according to the math

[163]

problem we have an appraised value of

[168]

$200,000 and we have a tax rate of 50%

[173]

it also said that we have a mill levy of

[176]

zero or decimal zero one zero so again

[180]

we've gotten three out of the four

[182]

things that we need to make our

[185]

calculations to find out what our taxes

[187]

are owed now understand this the real

[190]

estate licensing exam will always give

[192]

you enough information for you to

[195]

complete the test question and this is

[197]

true what math as well now again

[199]

sometimes I've heard students say that

[202]

they've given them all four but here we

[203]

have enough information where we can

[205]

calculate those taxes so we take the

[207]

appraised value and we multiply it by

[209]

50% two ways to get our assessed value

[213]

here so 200,000 times 50% equals our

[217]

assessed value and there's two ways to

[219]

go about this you can take 200,000 type

[222]

in five zero and hit the percent key on

[224]

your calculator and it'll give you the

[226]

value or if you have a very simple

[229]

computer many states when you take your

[231]

exam they won't allow you to have

[233]

anything other than a very simple

[235]

calculator so you're going to need to

[237]

know how to convert this so it would be

[238]

two hundred thousand multiplied by

[240]

decimal five zero all right a little

[244]

fourth grade math there so we take two

[247]

hundred thousand multiplied by 50% that

[249]

gives us an assessed value of $100,000

[254]

then we take $100,000 and we multiply it

[257]

by decimal zero one zero and that should

[261]

give us a calculation of one thousand

[263]

dollars tax that's owed

[267]

that's how we use the mill levy method

[270]

of calculating property tax now let's

[273]

take a look at how to calculate property

[275]

tax using the valuation method ok the

[279]

second way that we can calculate taxes

[281]

is using the valuation method now let's

[284]

take a look at a sample problem 16:21

[288]

Center Street has an appraised value of

[290]

two hundred and fifty thousand dollars

[293]

the county assesses taxes at a rate of

[296]

two dollars and fifty cents per $100

[300]

evaluation calculate the taxes owed all

[305]

right in our example here our property

[309]

has an appraised value of two hundred

[311]

and fifty thousand dollars and we're

[315]

going to multiply that by two dollars

[318]

and fifty cents per one hundred dollars

[324]

of value all right so what I like to do

[328]

is just put in two dollars and fifty

[330]

cents right here now there is a shortcut

[332]

to this okay because the test question

[336]

could say something like two hundred and

[338]

fifty thousand dollars is the appraised

[340]

value and they tax at two dollars and

[343]

fifty cents per one thousand dollars of

[345]

value or ten thousand dollars of value

[347]

so what I've learned over the years is

[350]

you write in your raw number of 2.50 now

[353]

there are two zeros in 100 so we're

[358]

gonna move our decimal place two

[361]

positions remember that's just a little

[363]

bit of third-grade math there so we're

[366]

going to take 250 thousand dollars and

[368]

we're going to multiply it by decimal

[371]

zero two five zero and that gives us a

[376]

tax calculation of six thousand two

[379]

hundred and fifty dollars so taxes owed

[382]

is six thousand two hundred and fifty

[384]

dollars now all right so let's look at a

[387]

different scenario here let's say that

[388]

it's two hundred and fifty thousand

[390]

dollars times two dollars and fifty

[391]

cents per one thousand dollars of value

[394]

all right let's look at a different

[397]

scenario here maybe the test question

[399]

says

[400]

the appraised value of the property's

[402]

250,000 dollars but the county taxes at

[405]

a rate of $2.50 per 1,000 dollars of

[409]

value so how do we do that well we put

[412]

our 2.5 zero and then there are three

[416]

zeros and one thousand so we're going to

[418]

move our decimal place three spots so we

[423]

take two 250,000 dollars and we multiply

[427]

it by decimal zero zero two five and

[431]

that gives us the amount of tax owed in

[434]

the amount of six hundred and twenty

[436]

five dollars so it's just a quick little

[439]

shortcut on how to calculate property

[443]

taxes when you're using the valuation

[445]

method do me a favor if you have a

[447]

question please put it down in the

[449]

comment section number two if you

[452]

already have taken your exam and you

[454]

remember that you had a test question

[456]