Before you read
Test yourself first: 5 questions
Question 1 of 5
A lender forecloses a $300,000 first mortgage. The auction brings $280,000. Property taxes of $8,000 are owed, foreclosure costs are $12,000, and a $40,000 second mortgage exists. After costs and taxes, the first lender receives:
Answer: B. Distribution order: costs ($12,000), then the superior tax lien ($8,000), then the first mortgage. $280,000 − 12,000 − 8,000 = $260,000 to the first lender (shortfall may support a deficiency claim); the second lender gets nothing from the sale.
Question 2 of 5
A property is assessed at $200,000 and taxed at 20 mills. What are the annual property taxes? (1 mill = $1 per $1,000)
Answer: B. 20 mills = $20 per $1,000. $200,000 ÷ 1,000 = 200 units × $20 = $4,000.
Question 3 of 5
Annual property taxes are $3,650. Using a 365-day year, what is the daily tax amount for proration?
Answer: A. $3,650 ÷ 365 days = $10 per day.
Question 4 of 5
Assessed value is used primarily to:
Answer: B. Assessed value is the figure the taxing authority uses to compute property taxes; it often differs from market value.
Question 5 of 5
In general, the priority of mortgage liens among themselves is most often determined by:
Answer: B. Lien priority generally follows the recording date and time ('first in time, first in right'), unless a subordination agreement or a statutory priority (such as property taxes) changes the order.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
A $200,000 assessed home at 25 mills owes $5,000. Owners can appeal assessments (not rates) to a review board with comparable evidence. Unpaid taxes become a superior lien and can lead to tax sale with certificate and redemption systems. SPECIAL ASSESSMENTS charge benefited properties for local improvements — sidewalks, sewers — and are also priority liens.
Property Taxes: Assessment, Rates & Appeals: FAQs
Is Property Taxes: Assessment, Rates & Appeals on the real estate exam?
Yes. Brokerage & Practice is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
