Property tax

If a condominium owner lives in his condominium and pays all of the following, which of the following would be deductible for federal income tax purposes?

Any interest that he pays on a mortgage for his share of the common areas;

For federal income tax purposes, capital expenditures for improvements:

Are added to the "cost basis" of the property and depreciated;

For federal income tax purposes, the basis of real property acquired by a purchaser is the property's:

Cost

As one of the qualifications for a depreciation deduction for income tax purposes, the real property must be:

Improved

A real estate broker would most likely encounter the term "boot" when considering a problem involving:

Income tax;

Agent Flagg often refers to tax shelters when discussing a property with a customer. Agent Flagg is primarily referring to:

Income taxes.

According to income tax laws, which of the following is true about depreciation of land?

Land is not depreciated.

Daniel has purchased an 18-unit apartment building. If he reports his income on a cash basis, he can deduct all of the following on his next income tax return, except:

Loss of rental because of vacancies suffered by two units;

Which of the following items can be deducted for income tax purposes on real estate which is held as a personal residence:

Property taxes and mortgage interest.

The Internal Revenue Service would define the marginal tax rate as:

The tax rate which is used for the next dollar of taxable income earned;

Mr. Wall owned an apartment building with an adjusted cost basis of $220,000 and a fair market value of $330,000. He exchanged the property for an apartment house which had a fair market value of $365,000. Both properties were free and clear and no adjustment was made for the differences in value. For federal income tax purposes, the new property will have a basis for Mr. Wall of:

$220,000.

A lender receives $360 a month as payment on a single-family home-owner's loan. He credits these installments as follows: $13.00 principal, $202.00 interest, $104.00 taxes, and $21.00 fire insurance. If these amounts remain constant for each month during a tax year, which of the following amounts would the homeowner be able to claim as deductions when filing an annual federal income tax return:

$3,672.00;

Lawson bought a parcel of raw land in 1963 and subdivided it into four separate lots. Twenty-five years later, he sold each lot for $10,000. The adjusted basis for each lot was $2,000. Lawson's long-term capital gain on these transactions is:

$32,000;

Reynolds paid $100,000 cash for a lot and constructed a $500,000 income-producing building on the lot. The construction was financed by paying $100,000 cash and a $400,000 loan at 8% annual interest secured by a lien against the property. How much can Reynolds depreciate on future income tax returns:

$500,000.

Which of the following would be an example of "boot," for income tax purposes:

Debt relief from a mortgage in the exchange;

All of the following may be added to the original cost basis of a property to arrive at an adjusted basis for federal income tax purposes, except:

Mortgage payments.

Sampson owned a triplex valued at $160,000, with an adjusted basis of $70,000. King owned a duplex valued at $155,000. Both properties were owned free and clear. They exchanged their properties, with King giving Sampson $5,000 in cash. For Federal Income Tax purposes:

Sampson has a recognized gain;

For federal income tax purposes, a taxpayer could adjust the cost basis of his personal residence for which of the following items:

The addition of a concrete patio.

In which of the following situations would an IRS Section 1031 exchange not be allowed:

The properties are not of a like kind;

Under Federal Income Tax regulations, an individual may not deduct a loss on the sale of residential property unless:

The property was bought as an investment and was rented or leased out as such.

Mr. Smith, who owns an apartment and no other real property, sustained a $30,000 operational loss for the last tax year. For income tax purposes, he may

Use the loss to offset any capital gain realized;