RE

Tabitha, an investor, owes $85,000 in taxes for the year. She has received a $50,000 tax credit for building a low-income apartment complex. After applying the credit, what amount will Tabitha owe the IRS?

$35,000

Mildred is the seller in an installment sale of a commercial property. If her installment obligations at the end of the tax year are _______, she has the option to pay the capital gains tax in full at sales time or through installment sale deferment.

$5 million or less

Your client Joseph has a commercial income-producing property. How long does he depreciate this property?

39 years

Which of the following statements about commercial residential properties is true?

A commercial residential property is a multi-family residential property.

Which of the following is an example of constructive eviction?

A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.

Which of the following acts requires office buildings to be accessible to individuals with a disability, such as those who use wheelchairs?

Americans with Disabilities Act

When it comes to real estate investments, "commercial" is ______.

Both an investment strategy and a property type

Which of the following is one reason for the popularity of commercial leasing?

Business owners can often make more money on their business than they can on the appreciation of the building where they conduct that business.

Mutual savings banks have limitations on their lending activities, as specified in their ______.

Charter

Which class of office building is aimed at tenants requiring functional space at below-average rents for the area?

Class C

Property with ownership by more than one person is known as ______.

Co-ownership

Investors who maintain strong relationships with local ________ will have a source of information about market trends, such as what cap rates local investors are willing to accept.

Commercial real estate lenders

Theodore is planning to purchase one of two companies he's been researching. Both produce the same type of tools. Company A has a high operating leverage. Company B has a low operating leverage. Theodore is favoring Company A because of it's operating leverage. What advantage does Company B have that Theodore might not have recognized?

Company B doesn't have to increase sales as much as Company A to cover its fixed costs.

If TVC has $450,000 in assets, $75,000 in debt, and $330,000 in equity, which of these ratios are correct?

Debt-to-Asset, 17%; Debt-to-Equity, 23%, Debt-to-Capital, 19%

Which of the following is a form of commercial bank revenue related to mortgage financing?

Demand deposits

Landlords may protect themselves from having to pay for damages to the property caused by the tenant by collecting a security ______ from the tenant.

Deposit

Jeannie is an investor interested in purchasing a warehouse. Two properties on opposite ends of town are fairly comparable in terms of price and features. Which of the following is a true statement?

Even though the properties are similar in price and features, the property taxes for the properties could vary a lot.

How many dwelling units does a commercial residential property have?

Five or more

What phrase describes the amount that today's dollars grows to over time?

Future value

When is an investor required to pay the alternative minimum tax?

If the tax calculated on IRS Form 6251 is higher than that calculated on the investor's regular tax return.

Marshall is your investor client who is interested in purchasing an apartment building. You've identified several properties to show him. Since he's planning to remodel and add more units to the property he ultimately purchases, which of the following is something you should mention?

Improvements increase assessed value and will increase property taxes.

What type of value may consumers be interested in if they are looking for the potential rate of return?

Investment value

You have an investor client who's interested in learning more about the advantages of a 1031 tax-deferred exchange. What might you tell him?

It allows investors to defer capital gains taxes when selling a property, provided they buy a like-kind property within a set amount of time.

What happens at the end of the term established for a grantor retained income trust?

It vests to the beneficiary.

Fairwell Lending must seek the court's permission to foreclose on a property used as collateral for a loan that is in default. What type of foreclosure process is likely being used?

Judicial foreclosure

Mitchell is interested in forming an organization that will combine the pass-through taxation benefits of a partnership with the minimal liability of a corporation. What organization should he consider?

LLC

Which of the following is a passive type of real estate investment?

Limited partnership

If developers have questions about building a subdivision in a community, which organization should they approach for answers?

Local planning board

Damien was representing a commercial property owner. Which one of the following duties can the owner expect Damien to perform on the property owner's behalf?

Locate and qualify potential tenants.

The law of agency requires Westin, a property manager, to _______.

Maintain confidentiality and loyalty to the owner's best interests

What is the name of the tenant group that, along with the property manager, is responsible for regional shopping center promotional activities?

Merchants' association

Which of the following Real Estate Investment Trusts focus on lending money for mortgages and investing in mortgage-backed securities?

Mortgage REIT

Carla Ricardo has been offered her dream job in another state. She asks her current landlord to let her out of her lease early. The landlord agrees to do so, with no strings attached. Carla and her landlord have decided to terminate the contract through ______.

Mutual agreement

When licensees focus all their efforts on one segment of the real estate market with the intention of minimizing, and perhaps even eliminating, the competition, this is known as ______.

Niche marketing

Which of the following statements about non-compete clauses and community shopping center leases is true?

Non-compete clauses aren't used in community shopping center leases.

Which of the following items does the IRS consider personal tangible property?

Office equipment

A taxpayer can claim a capital gains exclusion _______.

Once every two years

When Saundra Neill signed a property management agreement with Awesome Altus Properties, Inc., she made sure the agreement stated explicitly that Awesome Altus owned each property she would be managing. In which section of the agreement would she find this verification?

Owner's covenants

Although commonly used with shopping centers and malls, Sylvia likes to use a _____________ lease, in which her tenants pay their base rent plus a percentage of their gross sales.

Percentage

With which type of lease do tenants pay their base rent plus a percentage of their gross sales?

Percentage

If a borrower fails to keep homeowners insurance on the collateral property, which of the following are actions the lender can take?

Place lender-acquired insurance on the property and bill the borrower

For both homeowners and real estate investors, buying real estate is considered a good way to ______.

Preserve capital

When it comes to a property's highest and best use, which of the following applies?

Profitability

What type of asset is held in a land trust?

Real estate

Which of the following statements regarding investment is true?

Real estate investment provides the potential for earning income two different ways from the same investment.

The chance that an investor might lose money is known as _______.

Risk

With a promotional land sale agreement, who usually carries back a portion of the purchase in the form of a purchase-money mortgage or an installment contract?

Seller

Changes in the national market may have little (or significantly delayed) impact on local markets. This is because the real estate market is ______.

Slow to respond

Some countries have banks that issue loans for U.S. real estate purchases. What are the main countries that participate?

Taiwan, the U.K., and Canada

Which one of the following statements about testamentary trusts it true?

Testamentary trusts do not avoid probate.

Tyrone is looking for single-lot investment opportunities. What would be most important for him to research?

The community's growth patterns

Which of the following statements best describes the judicial foreclosure and sale process?

The lender must seek the court's permission to foreclose on the property used as collateral for the loan.

Ad valorem taxes are based on what?

The property's assessed value

What is financial risk?

The risk that is directly related to leverage

During the option period to renew a lease, who determines whether the option will be exercised?

The tenant makes the decision.

Monica and Daniel Nicks have applied and been approved for a mortgage loan. Who will provide them the money for the loan?

Tina Mathers, a mortgage banker

Which ADA title is concerned with the accessibility of public accommodations?

Title III

Which type of net lease sometimes requires a tenant to pay the interest payments on the lessor's mortgage on the property in addition to base rent?

Triple net

A property manager should consider future economic trends to estimate ______ more accurately.

Vacancy rates

Zander, a relatively inexperienced residential property manager, has decided to rent an apartment to his friend, Melissa, without a written lease. Melissa has a history of not paying her rent. Which of the following issues may Zander face because there is no signed lease agreement?

Zander may have difficulty evicting Melissa for breach of contract.