To determine how much you should set aside each month to pay your property taxes at the end of the year, let's break down the calculation into clear steps:
1. Determine the annual property tax:
- Home value: [tex]$175,000
- Property tax rate: 1.5%
First, convert the property tax rate from a percentage to a decimal by dividing by 100:
\[
\text{Tax rate (decimal)} = \frac{1.5}{100} = 0.015
\]
Next, calculate the annual property tax by multiplying the home value by the tax rate:
\[
\text{Annual property tax} = \text{Home value} \times \text{Tax rate} = 175,000 \times 0.015
\]
This gives us:
\[
\text{Annual property tax} = 2,625
\]
2. Determine the monthly amount to set aside:
Since the property taxes are due at the end of the year, you need to save a certain amount each month to have the total amount ready. There are 12 months in a year, so divide the annual property tax by 12:
\[
\text{Monthly savings} = \frac{\text{Annual property tax}}{12} = \frac{2,625}{12}
\]
This gives us:
\[
\text{Monthly savings} = 218.75
\]
Therefore, each month, you should set aside $[/tex]218.75 to ensure you have the $2,625 needed to pay your annual property tax at the end of the year.
