A commercial office building in Birmingham has a fair market value of $500,000. The local millage rate is 40 mills. Using Alabama's classified property tax system, what is the annual ad valorem tax owed on this property?
Correct Answer
D) $4,000
Step 1 — Identify the property class: A commercial office building is Class II property, assessed at 20% of fair market value. Step 2 — Calculate assessed value: $500,000 × 20% = $100,000. Step 3 — Convert millage rate: 40 mills = 40 ÷ 1,000 = 0.040. Step 4 — Calculate tax: $100,000 × 0.040 = $4,000. The annual ad valorem tax is $4,000.
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