In calculating the effective tax rate, which two categories are primarily compared?

In calculating the effective tax rate, the primary comparison is between the current tax bill and property value. The effective tax rate essentially represents the amount of tax payable as a percentage of the property's value. To derive this rate, one takes the total taxes assessed (the current tax bill) and divides it by the assessed value of the property, often expressed as a percentage.

This method provides a clear indication of the burden of taxes relative to what is owned. For property owners and potential buyers, understanding the effective tax rate is crucial as it directly impacts the cost of owning property and can influence investment decisions.

The other options do involve financial assessments but do not relate directly to the calculation of the effective tax rate in the realm of property taxation. While aspects like equity value or rental income play roles in broader financial analyses, they are not used in the specific formula for determining the effective tax rate for properties.