Real Estate U 17-19

If the depreciable basis for single family residence is $550,000, what is the allowable annual depreciation using the straight-line depreciation method ...?

$20,000 $550,000 / 27.5 = $20,000

A commercial property has a depreciable basis of $2,250,000. Using the straight-line method, what is the allowable annual depreciation for the property ...?

$57,051.28

What is the taxable gain of a property that sold for $1,100,000 with an adjusted basis of $525,000 ...?

$575,000 $1,100,000 - $525,000 = $575,000

The original cost of a property minus depreciation and sales of operations, thereof, plus allowable additions such as capital improvements and certain carrying costs and assessments, is referred to as ...?

Adjusted Basis

The Low Income House Credit (LIHC) was established under this Act ...?

Tax Reform Act of 1986

If the depreciable basis for a single family residence is $2,750,000, what is the annual allowable depreciation, assuming a 27.5 economic lifespan ...?

$100,000

If the depreciable basis for single family residence is $225,000, what is the allowable annual depreciation using the straight-line depreciation method ...?

$8,181.82 $225,000 / 27.5 = 8,182.82

The Taxpayer Relief Act of 1997 allowed homeowners to realize a $250,000-$500,000 tax exemption at the sale of their property. However, the homeowner must have lived in the residence for how many years, within the past 5 years ...?

2

Residential property depreciates over how many years ?

27.5 Years

Abby owns a 2 family investment property. Using the straight-line depreciation method, over how many years will Abby's property depreciate ...?

27.5 years

Using the straight-line depreciation method, commercial property is depreciated over how many years ...?

39 years

Using the straight-line depreciation method, income producing , non-residential properties deprecate over how many years ...?

39 years

A key retail tenant, which is typically one of the larger stores in a shopping mall, usually a department store or major retail chain, is known as a/an ...?

Anchor Store

In order to qualify for a 1031 exchange, a newly purchased property must be located where ...?

Anywhere in the United States

Which of the following is an example of 'Other Miscellaneous Income', found in the operating budget ...?

Application Fees

When does deprecation NOT help the owner of a property ...?

At the sale of the property

A major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out is known as ...?

Basis

Cash received in a tax-deferred exchange is known as...?

Boot

Which of the following expenses is typically related to the age of the building ...?

Building repairs

Operations income does NOT include which of the following...?

Capital Gains

Money set aside by a property owner for long-term capital expenditures to a property is known as ...?

Capital Reserve Budget

Real estate investors will most likely benefit most from this type of depreciation ...?

Component Depreciation

The periodic expensing of an asset over the property's theoretical economic life is referred to as what ...?

Depreciation

Which of the following is a skill typically required of property managers ...?

Handle landlord-tenant relations

A 1031 exchange applies to what types of property ...?

Investment properties

What type of propertied benefit from a 1031 exchange ...?

Investment properties

Mortgage brokers do NOT do what in a transaction ...?

Issue a loan to a borrower

A payment to a mortgage broker by a lender is known as a ...?

Lender Rebate

Which of the following is typically found in a management agreement ...?

Length of the agreement, reporting, management fees

What must all bankers and brokers have in order to practice as a loan originator ...?

License

Which of the following creates a general agency relationship between the property manager and an owner ...?

Management Agreement

A contract between the owner of a property and someone who agrees to manage it is known as a/an ...?

Management Agreement.

A document that sets fourth the duties of the manager when employed by the owner is know as a ...?

Management Proposal

This document is developed by the property manager and describes how rents will be maximized ...?

Marketing Plan

A property management report is typically delivered to the owner on what basis ....?

Monthly

Who should your client contact if he/she wants to get a mortgage, and prefers NOT to work with a middle man in the process...?

Mortgage Banker

An intermediary who brings borrowers and mortgage lenders together, but does not use his/her own funds to originate mortgages is known as a ...?

Mortgage Broker

A written notice from the bank of other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house is known as what ...?

Mortgage Commitment

Michael is seeking to purchase his first home using bank financing. Who should Michael work with to get the best terms possible for his mortgage...?

Mortgage broker

Which of the following is NOT a requirement for homeowners when deducting mortgage interest on their tax returns ...?

Must have a 30-year amortization loan

The taxable income of a property is calculated by subtracting the depreciation from this ...?

Net income

In which type of property management must a manager understand the layout needs and desires of the tenant ...?

Office Management

This type of income is realized by the owner during the year-to-year operations of the property...?

Operation Income

In a rental property, how is the management fee typically calculated ...?

Percentage of the income collected

Which of the following is NOT considered a depreciable asset ...?

Personal use assets

A highly designed residential project that features relatively dense clusters of houses, which are usually surrounded by areas of commonly owned open space maintained by a nonprofit community association is known as a ...?

Planned Unit Development

Which of the following may be completed by the bank prior to a buyer finding a property to purchase ...?

Pre-approval

An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified period of time is known as what ...?

Rate Lock

In most rental buildings, this is commonly found to be the largest expense for the building...?

Real Estate Taxes

In which type of property management is the manager most likely to evict tenants ....?

Residential Management

In what type of property management must a manager understand the needs and desires of an anchor tenant ...?

Retail Management

A method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year, is known as ...?

Straight-line Depreciation

An annual allowance for the wear and tear, deterioration, or obsolescence of a property is known as...?

Tax Depreciation

This Act raised the bottom tax rate from 11% to 15%...?

Tax Reform Act of 1986

When depreciation is subtracted from net income to determine a property's taxable income, the depreciation is considered a ...?

Tax deduction

As a result of this Act, the top capital gains rate fell from 28% to 20% ...?

Taxpayer Relief Act of 1997

Which of the following is NOT prepared by a property manager when managing a rental building ...?

Tenant fit-out budget

Which of the following is NOT a skill typically required of a property manager ...?

Understand the local zoning resolution

The depreciable basis for a single family residence is calculated using the following formula ...?

Value of house - land value = Depreciable Basis

Property expenditures that vary depending of the operations of the property are known as...?

Variable Expense

You have a client who is interested in purchasing a coop in Manhattan. As a real estate agent, what should you do before showing prospective properties to your client ...?

Verify that the client can obtain financing on the property