California Real Estate Practice Exam

If a property for sale is listed at $120,000 and has an outstanding assessment bond of $1,200, what would be the basis for taxes at the time of sale?

1. $118,000

2. $120,000

3. $121,200

4. Indeterminable from information

The correct answer is: $118,000

The basis for determining taxes at the time of sale typically involves the property's sale price and any outstanding assessments that could affect the property's value. In this case, the property is listed at $120,000 with an outstanding assessment bond of $1,200. To calculate the basis for taxes, you subtract the amount of the outstanding assessment bond from the sale price of the property. This means that the $1,200 assessment bond, which is a financial obligation attached to the property's title, should be deducted from the listing price of $120,000. This results in a tax basis of $118,800, which would likely be rounded to $118,000 for assessment purposes. Thus, the proper determination for the tax basis, taking into account the outstanding bond, is indeed $118,000. This consideration is important for both buyers and sellers in real estate transactions, as it impacts property tax assessments and financial calculations relating to the sale.