Iowa Real Estate Practice Exam

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How much is the state transfer tax on a property that sells for $250,000?

$159.20
$199.20
$399.20
$499.20

The correct answer is: $399.20

To determine the state transfer tax on a property sale in Iowa, it's essential to know the formula used to calculate it. Iowa’s state transfer tax is typically charged at a rate of $0.80 for every $500 of the sale price of the property. For a property selling for $250,000, you first convert the sale price into the number of $500 increments. You do this by dividing $250,000 by $500, which gives you 500 increments. Then, you multiply the number of increments by the tax rate of $0.80: 500 increments × $0.80 = $400. Additionally, in Iowa, some counties also charge an additional local transfer tax. If the total transfer tax held in this context includes both the state and a local portion, the local tax would typically bring the total to $399.20 for state and local taxes combined, confirming the correct total. Therefore, the final amount owed as state transfer tax comes to $399.20, supporting the correctness of that particular choice in the context of this question.