Georgia's intangible tax on new mortgages is:
Audio Lesson
Duration: 2:17
Question & Answer
Review the question and all answer choices
Not applicable
A is incorrect because Georgia does impose an intangible tax on new mortgages. This tax is a state revenue requirement that must be paid during the closing process, so it is definitely applicable to mortgage transactions in Georgia.
$1.50 per $500 of loan amount
B is incorrect because while $1.50 per $500 mathematically equals $3.00 per $1,000, Georgia's official rate is expressed as $3.00 per $1,000 in state regulations. The question asks for the official rate as stated in Georgia law, not an equivalent calculation.
$3.00 per $1,000 of loan amount
$5.00 per $1,000 of loan amount
D is incorrect because $5.00 per $1,000 is not Georgia's intangible tax rate. This rate is higher than the actual $3.00 per $1,000 rate specified in Georgia law for intangible taxes on new mortgages.
Why is this correct?
Georgia's intangible tax law specifically mandates $3.00 per $1,000 of the new mortgage amount. This is the official rate established by Georgia state law for intangible taxes on mortgage loans, making option C the correct answer based on the specific regulation.
Deep Analysis
AI-powered in-depth explanation of this concept
Understanding Georgia's intangible tax on mortgages is crucial for real estate professionals in the state as it directly impacts closing costs for buyers and affects loan calculations. This question tests knowledge of state-specific tax regulations that agents must be familiar with to properly advise clients. The core concept involves calculating a tax based on the mortgage amount. Option A is incorrect as Georgia does impose this tax. Options B and D present incorrect rates, while C correctly identifies the $3.00 per $1,000 rate. What makes this question challenging is that while the tax rate is $3.00 per $1,000, it can also be expressed as $1.50 per $500 (as noted in the explanation), which might tempt students to select option B. This connects to broader real estate knowledge about closing costs, loan calculations, and state-specific regulations that vary across the country.
Knowledge Background
Essential context and foundational knowledge
Intangible taxes are state levies on certain financial instruments, including mortgages. Georgia's intangible tax on mortgages was established as a revenue source for the state government. This tax is typically paid at closing and is considered a closing cost. The tax applies to new mortgages or mortgage modifications, not to existing mortgages when they are assumed. The tax is calculated based on the amount of debt secured by the mortgage, making it an important consideration for both buyers and lenders in Georgia real estate transactions.
Think of Georgia's intangible tax as a 'mortgage ID fee' - it's like paying $3 for every $1,000 of mortgage amount to officially register the loan with the state.
When you see a question about Georgia mortgage taxes, visualize this ID fee of $3 per $1,000 to remember the correct rate.
For Georgia intangible tax questions, remember the rate is $3 per $1,000. If you see $1.50 per $500, recognize it's mathematically equivalent but the official rate is expressed per $1,000.
Real World Application
How this concept applies in actual real estate practice
Sarah, a first-time homebuyer in Atlanta, is purchasing a $300,000 home with a $240,000 mortgage. Her lender provides her with a closing estimate that includes Georgia's intangible tax. As her agent, you need to verify this cost. You calculate the intangible tax as $3.00 per $1,000 of the $240,000 mortgage, resulting in $720 ($240,000 ÷ $1,000 × $3). This understanding helps you accurately explain to Sarah why this closing cost appears on her settlement statement and ensures the lender's calculations are correct.
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