Tax = Assessed Value x Mill Rate / 1,000. One mill is $1 per $1,000 of assessed value, worked for the NY exam.
Tax = Assessed Value × Mill Rate ÷ 1,000 (1 mill = $1 per $1,000)
How to solve it, step by step
- Find the assessed value. Apply the assessment ratio to market value if one is given.
- Multiply assessed value by the mill rate.
- Divide by 1,000.
- Subtract any exemptions the question specifies.
Worked examples
Assessed value $200,000, mill rate 25. Annual tax = $200,000 × 25 ÷ 1,000 = $5,000.
With an assessment ratio: a home with a $350,000 market value assessed at 60% has an assessed value of $210,000. At a mill rate of 18, tax = $210,000 × 18 ÷ 1,000 = $3,780.
What the NY exam actually asks
The exam separates market value from assessed value. Tax is always calculated on the assessed value, and you may have to apply an assessment ratio first.
Try one yourself
A home has a market value of $400,000 and is assessed at 40% of market value. The mill rate is 22. What is the annual tax?
Show the answer
$3,520. Assessed value = $400,000 × 0.40 = $160,000. Tax = $160,000 × 22 ÷ 1,000 = $3,520.
Common mistakes
- Taxing the market value instead of the assessed value.
- Forgetting to divide by 1,000. A mill is a thousandth.
- Ignoring exemptions such as STAR when the question includes one.
Questions students ask
What is one mill?
One dollar of tax per $1,000 of assessed value, or one tenth of one percent.
Is tax calculated on market value?
No. It is calculated on assessed value, which is often a fraction of market value.
Related formulas
- How to prorate taxes and rent at closing
- The capitalization rate formula
- All 12 formulas — NY Real Estate Math Cheat Sheet
- Real Estate Math Calculator
Practise this. The free 10-question math quiz drills these formulas, and the free timed practice exam puts them under exam conditions.
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