FL Real Estate Unit 18

The city is petitioned to pave the streets in a neighborhood. The paving cost is $32 per foot, and the city is to pay 25% of the cost. There are homes on both sides of the streets to be paved. If the lot frontage on the street is 105 feet, the special assessment for the street paving for this homeowner is

$1260 = 105 front feet × $32 per foot = $3,360; $3,360 × .75 (owner's share of cost is 100% - 25%) = $2,520. $2,520 ÷ 2 (one-half of the street paving cost) = $1,260.

Floridians who homestead their residence and who reside on the property as their permanent legal residence are eligible for a $50,000 homestead tax exemption from city, county, and school board taxes.

$25;

A homeowner originally purchased a new home for $325,000. During the period of ownership, the homeowners spent $25,000 in capital improvements. The homeowners sold the home 15 years later for $449,900. The homeowners paid a brokerage fee of 5% of the sale price and paid out-of-pocket closing costs totaling $3,250. What is the homeowners' capital gain from the sale?

$74,155 = $449,900 sale price × .05 = $22,495 broker commission. $449,900 - $22,495 - $3,250 closing costs = $424,155 amount realized from sale. $325,000 purchase price + $25,000 capital improvements = $350,000 adjusted basis. $424,155 - $350,000 = $74,155 capital gain.

A homesteaded single-family residence has an assessed value of $92,800. The owner is a 25% service-disabled veteran who is 75 years of age. What is the total homestead tax exemption? A) $55,000 B) $50,500 C) Totally tax exempt D) $30,000

A

A development company purchased 1,000 acres of land from a foreign seller for $2,850,000. Federal law requires the buyer to withhold from the seller and pay to the IRS approximately A) $0. B) $285,000. C)$142,500. D) $28,500.

B

Homeowners originally purchased a new home for $225,000. During the period of ownership, the homeowners spent $27,500 in capital improvements. When the homeowners sold the home 15 years later for $359,900, they paid a brokerage fee of 5% of the sale price and paid out-of-pocket closing costs totaling $2,550. What is the homeowners' capital gain from the sale? A) $197,500 B) $86,855 C) $114,355 D) $48,045

B

If a request for a property tax adjustment is denied, what is the property owner's next step? A) Contact the county tax collector or a representative B) File a petition with the Value Adjustment Board C) File a certiorari proceeding with the county court D) Sue the county property appraiser

B

Which statement is FALSE regarding property taxes? A) Property taxes become a lien on all real estate in Florida on January 1 each year. B) Property taxes for the previous year are due on November 1. C) Ad valorem tax means according to value. D) The county property appraiser assesses all real property within the county.

B -

An investor purchased a commercial building in January for $524,900. The contract specified that 80% of the purchase price be allocated to the structure, and the remaining purchase price be allocated to the land. What is the annual depreciation deduction? (Round to nearest dollar.) A) $3,817 B) $10,767 C) $15,270 D) $13,459

B = $524,900 × .80 = $419,920 building. $419,920 ÷ 39 years = $10,767.

Tax advantages of homeownership do NOT include A) a tax deduction of the interest paid on a home equity loan that does not exceed $100,000. B) up to $10,000 in penalty-free withdrawals from an IRA if used as a down payment on a personal residence for first-time homebuyers. C) exclusion of gain from the sale of a principal residence up to $500,000 for a single adult. D) a tax deduction of property taxes paid.

C

The Value Adjustment Board is composed of A) three school board members and two county commissioners. B) two school board members and three county commissioners. C) one school board member, two county commissioners, and two citizen members. D) the city manager, property appraiser, and three other elected officials.

C

The just value of a homesteaded property in Leon County is $425,800. The Consumer Price Index for the previous year was 2%. The property's just value increased the maximum allowed under the Save Our Home Amendment. By what percentage did the just value increase? A) 3% B)Percentage passed by the residents of Leon County C) 2% D) Percentage increase approved by the county commissioners

C - 2%

If a married couple who files jointly realizes a profit from the sale of their home that exceeds $500,000, what is the result? A) Up to $125,000 of the excess profit will be taxed as a capital gain. B) The homeowners will not pay capital gains tax if at least one of them is older than 55. C) The excess gain will be taxed at the homeowner's income tax rate. D) The excess gain will be taxed at the current applicable capital gains rate.

D

Which item is NOT a deductible expense for an income-producing property? A) Mortgage interest B) Hazard insurance C) Depreciation D) Reserve for replacement

D

Which property is exempt from property taxes? A) Federal Reserve building B) Air Force base C) Florida Museum of Natural History D) Church

D

Special assessments are levied according to the value of a property.

FALSE

The IRS useful asset life of nonresidential income-producing property is 27.5 years for calculating depreciation all

FALSE - nonresidential income-producing property is 39 years. The useful life of residential rental property is 27.5 years.

Ad valorem means according to cost

FALSE = Ad valorem means according to value. Real estate taxes (commonly called property taxes) are based on the value of real property, hence the term ad valorem tax.

Mortgage origination fees (points) paid on a refinance mortgage loan are deductible in the year they are paid.

FALSE = Points paid when refinancing a loan must be deducted over the life of the loan.

Property taxes become a lien on January 1 and are junior to mortgage liens.

FALSE = Property taxes constitute a lien superior to all other liens on real property. Property taxes become a lien on January 1 each year

The purpose of Florida's Green Belt Law is to protect coastal property from commercial development.

FALSE = agriculture

A short-term capital gain is the sale of an asset held for less than 12 months.

TRUE

Government buildings are immune properties—that is, government buildings are NOT subject to taxation.

TRUE

Homeowners who have had the homestead exemption on their current home in the preceding year can transfer their SOH benefit to a new home.

TRUE

Property taxes are paid in arrears.

TRUE

The exclusion of gain from the sale of a principal residence is up to $500,000 of gain for married couples who file a joint return.

TRUE

Formula: Net Operating Income (NOI)

effective gross income (EGI) - operating expenses = net operating income (NOI)

Formula: Effective Gross Income (EGI)

potential gross income (PGI) - vacancy and collection losses + other income = effective gross income (EGI)

Formula: Straight-Line Method to calculate depreciation

total cost to acquire property - value of the land = depreciable basis depreciable basis ÷ useful life (27.5 or 39 years) = annual IRS depreciation deduction