Real Estate, Chapter 12

Resident manager (required)

16 or more residential units

Tax Sale

A court-ordered sale of real property to raise money to cover delinquent taxes.

$500,000

A married couple are exempt from paying capital gains up to how much profit on an owner-occupied residence, if they lived there for at least 2 of the previous 5 years...?

property tax

A tax on the value of a property

Resident Manager

An individual who supervises the care of an apartment complex while living in one of the units in the complex.

The second installment of property taxes are due on...?

February 1

Property Tax Due Dates

November 1 = first installment Dec 10 = delinquent Feb 1 = 2nd installment April 10 = delinquent

Disclose, elect, and confirm

The three steps involved in completing the agency relationship disclosure process are:

mobile home dealer

Who is authorized to advertise a mobile home as new...?

Housing and Community Development (HCD)

manages the titling and registration documents for mobile homes.

Listing Agent

the individual who enters into a listing contract with a principal

A property will be sold at a tax sale if property taxes are not paid for how many years?

5 years

Capital Gains Exemption

Must have served as the principal residence for at least 2 of the prior 5 years Cannot have claimed on another property in prior 2 year span Single-filer: exempt up to $250K capital gain Married filer: exempt up to $500K capital gain

Adjusted Cost Basis

Purchase price of property plus cost of specified improvements, less any depreciation deductions taken on the property

November 1

The first installment of property taxes are due on..?

1 Capital gains is 15% for high earners...?

True

Capital gains are typically taxed at a lower rate than ordinary income...?

True

Dual agent

a real estate broker who represents both the seller and the buyer in a real estate transaction.

capital gains tax

a tax levied on the returns that people earn from capital investments, like the profits from the sale of stocks or a home

Election (timing)

happens contemporaneously with the execution of the listing agreement.

3 assessment events

1. Purchase or sale of property 2. Value of improvements 3. Maximum increase of 2% on the dollar amount (not the rate)

Agency Relationship

Fiduciary relationship (relationship of trust) in which agent acts on behalf of principal

ordinary income

Income earned from providing services or the sale of goods (inventory).

$250,000

1 An owner is exempt from paying capital gains on up to how much profit on an owner-occupied residence, if he or she has lived there for at least 2 of the previous 5 years...?

16 units

In California, resident managers are required in buildings with at least how many dwelling units...?

Section 1031 Exchange (time periods)

1. 45 days after closing the exchanger must identify another property to buy (up to 3 different properties). 2. Must close within 180 days of the close of previous property 3. Must use the services of a qualified intermediary (an individual or corporation that facilitates a 1031 exchange)

Special Assessment

A legal charge against real estate by a public authority to pay for the cost of public improvements such as street lights, sidewalks, and street improvements.

Listing Presentation

A meeting with a property owner where a sales associate describes the marketing efforts that the brokerage will make to bring about a sale of the property as quickly as possible

Mobile home dealer's license

A real estate broker can only sell a mobile home if they have been registered with...?

Mobile home dealer's license

A real estate broker cannot have two or more mobile homes offered for sale without first having a...?

Documentary transfer tax (paid by)

Customarily paid by the seller

Selling Agent

The individual who finds the buyer (or seller) for the property

Pre-approval

A step above pre-qualification, it involves verifying a purchaser's credit, down payment, and employment history.

Proposition 13

Also known as the "tax revolt", it was a Californian ballot measure in 1978 that slashed property taxes and forced deep cuts in government services. Limits the state tax rate to 1%.

Property Management

the operation of property as a business, including rental, rent collection, maintenance, etc.

Mobile home (rules)

1: A licensed broker may sell or buy only if the MH has been registered with HCD (Housing & Community Development). 2: A broker cannot have 2 or more MHs offered for sale without a MH dealer's license. 3. A broker cannot advertise a MH unless it is located in a lot specifically designated for mobile / manufactured homes. 4. Advertising of the mobile home must be taken down within 48 hours after the mobile home is no longer available for sale. 5. A MH cannot be advertised as new. 6. Cannot advertise that there is no down payment required when a down payment is required.

Disclosure form (timing)

A Listing Agent must give the form to the seller before the seller signs the listing agreement. He's not required to give a __________ to the buyer unless also acting as the Selling Agent. The Selling Agent is required to give the ________ to the buyer before the buyer signs an offer to purchase a particular property. The Selling Agent is also required to give the ________ to the seller before presenting an offer.

Documentary Transfer Tax

A state enabling act allows a county to adopt a documentary transfer tax to apply on all transfers of real property located in the county. Notice of payment is entered on face of the deed or on a separate paper filed with the deed.

mobile home

A structure transportable in one or more sections, designed and equipped to contain not more than 2 dwelling units to be used with or without a foundation system.

metes and bounds

A term used in describing the boundary lines of land, seeing forth all the boundary lines together with their terminal points and angles is known as...?

Capital gain

At resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long term based upon length of holding period after acquisition. Usually taxed at lower rates than ordinary income.

Prepaid Rental Listing Service (PRLS)

Business that supplies prospective tenants with property listings on payment of a fee; may be performed by a licensed real estate broker or under the authority of a ______ license.

180 days

How long does an individual have to close on another property in order to take advantage of a 1031 exchange...?

45 days

How long does an individual have to identify another property in order to take advantage of a 1031 exchange...?

manufactured home

a housing unit that is fully or partially assembled in a factory before being moved to the living site

Assessment

a mass appraisal of property as of January 1 each year for tax purposes. Assessments are based on large numbers of sales that are analyzed to determine values for large groups of similar properties.

Disclosure Form

must be provided to purchasers prior to making an offer in order to clarify exactly what is being sold and what is being purchased

Section 1031 Exchange applies to:

non-residential properties, meaning either (1) an income producing property (multifamily residential, commercial, retail), (2) investment property (raw land with no improvements), and (3) property used in ones trade or business.

marginal tax rate

tax rate you pay on an additional dollar of income; increases as income rises. This method, known as progressive taxation, aims to tax individuals based on their earnings, with low-income earners being taxed at a lower rate than higher-income earners; separated by income levels into 7 tax brackets.

tax rate

the ratio at which the value of the property is taxed. It is generally expressed as an amount per $100 of assessed value. For example: $1.13 per $100 of value.

Federal Income Tax

the taxes that the federal government imposes on personal income in order to provide services