Jigger is planning to buy a house. He has two options. A 2400 sq. ft. bungalow in Whitby costs $389 000. A similar size house costs $369 000 in Oshawa. Jigger plans to base his decision on the cost of property tax paid. Whitby charges the property tax at the mill rate of 13.59815, whereas Oshawa charges the property tax at the mill rate of 16.18347. Where will Jigger end up paying less tax and likely buy the home?
A) Oshawa
B) Whitby
C) It costs the same in both Oshawa and Whitby
D) Not enough data to make a decision
E) He should not buy at all

Question

Quizplus · Accepted Answer

To calculate the property tax, we need to multiply the mill rate by the assessed value of the property. The assessed value of the property is usually a percentage of the market value. Let's assume that the assessed value for both properties is the same.

For the Whitby property: 
Assessed value = 389,000/2 = 194,500 
Tax = 194,500 x 13.59815/1000 = 2,645.33

For the Oshawa property: 
Assessed value = 369,000/2 = 184,500 
Tax = 184,500 x 16.18347/1000 = 2,984.67

Therefore, Jigger will pay less tax in Whitby and is likely to buy the house there.

Jigger Is Planning to Buy a House