unit 23 Mortgage Lending Tax Impacts

FIXED/ADJUSTABLE RATE NOTE

1. BORROWER'S PROMISE TO PAY This is the borrower's certification of payment terms and promise to pay. 2. INTEREST This is a statement of the interest rate. 3. PAYMENTS This is the borrower's promise to make payments based upon the amount and schedule set forth here. 4. ADJUSTABLE INTEREST RATE AND MONTHLY PAYMENT CHANGES (A) Change Dates This is the date the interest rate will change. 4. ADJUSTABLE INTEREST RATE AND MONTHLY PAYMENT CHANGES(B) The Index The explains "The Index" and LIBOR. 4. ADJUSTABLE INTEREST RATE AND MONTHLY PAYMENT CHANGES(C) Calculation of Changes(D) Limits on Interest Rate Changes(E) Effective Date of Changes(F) Notice of Changes This explains rate changes, what they will be, and when they will happen. 5. BORROWER'S RIGHT TO PREPAY This details pre-payment options. 7. BORROWER'S FAILURE TO PAY AS REQUIRED This details what happens if the borrower doesn't pay.

It's possible for the adjustment period on an adjustable rate mortgage (ARM) to have ranges, such as three or ______ years apart.

10

Bob just closed on his investment property. He's already identified a replacement property that he'll be exchanging into by using a 1031 tax-deferred exchange. How many days does he have to close on his replacement property?

180

What is the three-property rule as it relates to tax-deferred exchanges?

An investor can identify up to three replacement properties and not encounter a restriction regarding fair market value as long as debt load requirement is met.

John sells his single-family home and purchases a new home for his family to reside in. Marcus owns a single-family home, but rents it out to a co-worker while he is on an extended two-year military tour overseas. Donald sells an apartment complex and purchases a new complex in a different part of the city. Which of these consumers is most likely to take advantage of a 1031 tax-deferred exchange?

Donald

Which of the following could an investor who sells an apartment house buy using a 1031 exchange?

Duplex, office building, or warehouse

Which of the following statements related to 1031 tax-deferred exchanges is true?

Foreign investors may participate.

To whom would a 1031 tax exchange usually appeal?

Investors

95% rule

Multiple properties are okay, as long as they total at least 95% of the value of the relinquished property.

200% rule

Multiple properties are okay, but may not exceed 200% of value of the relinquished property.

A like-kind exchange, or 1031 exchange, is also referred to as a ______.

Tax-deferred exchange

Three-property rule

Up to three properties are okay with no fair market value restrictions