What does the EAT formula represent?

The EAT formula stands for "Effective Tax Rate," which is calculated by multiplying the assessment ratio by the tax rate. This formula is essential in real estate and property taxation as it helps property owners understand how much they will be paying in taxes based on their property's assessed value and the local tax rate set by the government.

The assessment ratio reflects the proportion of a property’s market value that is subject to taxation. The tax rate, determined by local municipalities, indicates the amount of tax payable per unit of assessed property value. By using the EAT formula, one can accurately estimate the effective tax burden on a property, which is particularly useful for budgeting and financial planning.

Understanding the EAT formula is critical for anyone involved in real estate or property management in New York City, where property taxes significantly impact overall operating costs and investment returns. The other choices, while they might seem relevant in certain contexts, do not correctly represent the meaning of the EAT formula in terms of property taxation.