A home in Orleans Parish has a fair market value of $325,000. The assessor determines that residential property in this parish is assessed at 10% of fair market value. The millage rate is 80 mills. The owner qualifies for and has applied the Louisiana homestead exemption. What is the owner's annual property tax bill?

Correct Answer

A) $600

Step 1 — Calculate assessed value: $325,000 × 10% = $32,500. Step 2 — Apply homestead exemption: The exemption reduces assessed value by $75,000, but since the assessed value ($32,500) is less than $75,000, the taxable assessed value is reduced to $0 only if assessed value is below $75,000. Wait — the exemption applies to the assessed value up to $75,000 of assessed value. Since $32,500 < $75,000, the full assessed value is covered. However, Louisiana law exempts the first $75,000 of fair market value (not assessed value) under the constitutional provision — but in practice the exemption is applied to $7,500 of assessed value (which equals $75,000 FMV × 10% assessment ratio). Step 2 revised — Exempt assessed value: $75,000 FMV × 10% = $7,500. Taxable assessed value: $32,500 − $7,500 = $25,000. Step 3 — Apply millage: $25,000 × (80 ÷ 1,000) = $25,000 × 0.080 = $2,000. Wait — let me re-examine. Louisiana Constitution Art. VII §20 states the exemption is $75,000 of the assessed value. So the exemption directly reduces assessed value by up to $75,000. Assessed value = $32,500. Since $32,500 < $75,000, taxable assessed value = $32,500 − $7,500 = $25,000 is wrong under this reading. Under the correct reading: taxable assessed value = $32,500 − $75,000 = negative, so taxable = $0, and tax = $0. That produces $0 which is not among the options. The standard Louisiana exam interpretation is that the $75,000 homestead exemption applies to $75,000 of the property's assessed value directly — meaning if assessed value is $32,500, the homestead wipes it out and tax = $0. Since $0 is not an option, the correct exam interpretation must be that the exemption applies to $75,000 of fair market value, which equals $7,500 of assessed value at 10%. Taxable assessed value = $32,500 − $7,500 = $25,000. Tax = $25,000 × 0.080 = $2,000. But $2,000 is option B. Re-checking option C ($600): $25,000 × 0.024 = $600 — that does not match 80 mills. Let me reconsider the problem with the answer being C = $600. If taxable assessed value = $7,500 and millage = 80 mills: $7,500 × 0.080 = $600. This would mean the exemption covers $25,000 of assessed value ($250,000 FMV equivalent), leaving only $7,500 taxable. That is not standard. The correct answer is B = $2,000 using the standard exam methodology: assessed value $32,500 minus exempt portion $7,500 (i.e., $75,000 FMV × 10%) = $25,000 taxable assessed value × 80 mills = $2,000.