What is the transfer tax that will be paid by the seller of a $510,000 home if the seller's state requires payment of a transfer tax of $1.25 for each $500 of the sales price of real estate?
A) $1,150
B) $1,200
C) $975
D) $1,275
Answer (2)
The calculation of the transfer tax for a $510,000 home at a rate of $1.25 per $500 results in a total tax of $1,275. This is calculated by determining the number of $500 units in the sale price and then multiplying by the tax rate. Therefore, the answer is option D: $1,275.
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Divide the sales price by 500 t o f in d t h e n u mb ero f u ni t s : \frac{510000}{500} = 1020$.
Multiply the number of units by the tax rate: 1020 × 1.25 = 1275 .
The total transfer tax is 1275 .
Explanation
Problem Analysis We are given the sales price of a home and the transfer tax rate. We need to calculate the total transfer tax.
The sales price is $510,000. The transfer tax rate is $1.25 for every $500 of the sales price.
Calculating the Number of Tax Units First, we need to find out how many $500 units are in the sales price. To do this, we divide the sales price by 500 : 500 510000 = 1020 $
So, there are 1020 units of $500 in the sales price.
Calculating the Total Transfer Tax Next, we multiply the number of units by the transfer tax rate to find the total transfer tax: 1020 × 1.25 = 1275 Therefore, the total transfer tax is $1275.
Final Answer The transfer tax that will be paid by the seller is $1275.
Examples
Transfer taxes are a common part of real estate transactions. Understanding how to calculate them helps both buyers and sellers estimate their closing costs accurately. For example, if you're selling a property and need to budget for these taxes, knowing the rate and applying it to the sale price ensures you set aside the correct amount. This prevents financial surprises and allows for smoother transactions.
