Real Estate Chapter 10
Mr. Carter was able to purchase an apartment building for $225,000. The property had been appraised for $250,000 and the tax assessor had placed a value of $200,000 on it. If Carter paid $50,000 down and financed the balance, his cost basis for income tax purposes would be:
$225,000 The cost basis is $225,000. The assessed value and financing have nothing to do with tax basis for income tax purposes.
A duplex worth $200,000 which has a first trust deed of $160,000 is exchanged for an apartment worth $225,000 with a lien of $182,000. The amount that would be given in the form of cash or a note to balance the exchange would be?
$3,000 The amount of cash or note is the difference in the equities of the two owners. The duplex with a value of $200,000 and a lown of $160,000 gives the owner a $40,000 equity. The apartment with a value of $225,000 and a loan of $182,000 gives its owner a $43,000 equity. The difference in the two equities is $3,000.
Assume that a street is improved under the 1911 Street Improvement Act. After the bill is presented to the property owner for the work, the property owner is allowed how many days to pay it before it goes to bond?
30 days After the bill is presented, the owner has 30 days to pay.
For federal income tax purposes, which of the following types of property can be depreciated?
A peach tree orchard A peach tree orchard would be classified as property used in a business and is depreciable.
An individual is not permitted to deduct a loss on his or her Federal Income Tax return if the loss resulted from the sale of:
A personal residence. You are not permitted to deduct a loss on the sale of a single family residence.
"Boot" has an important influence when considering:
A tax free exchange Usually the party receiving "Boot" in an exchange will have to pay income taxes
A federal income tax advantage could result from:
Any of the preceding A tax advantage could be received under any of the choices listed.
The second installment of county real property taxes becomes delinquent after:
April 10 The second installment becomes delinquent after April 10.
When property has become known as "Tax Defaulted Property", the owner will retain title to the property for five years. During this period the delinquent tax payer.
Can continue to possess the property. Once the taxes are delinquent and the property has become known as "tax defaulted property," the owner can remain in possession for a 5 year period.
The real property tax rate for the county is set by the:
County Board of Supervisors The tax rate is set by the County Board of Supervisors
First half taxes become delinquent on real property after:
December 10th First half of taxes become delinquent after December 10
One of the benefits under the federal income tax law that is available to individuals who own the home they reside in and who also itemize their deductions, is that they may deduct which of the following expenses:
Interest payment on their home loan Under present federal income tax laws, the homeowner is permitted to deduct interest payments on the home loan.
The Real Estate Tax Fiscal year is for the period:
July 1 through June 30 The tax year can be expressed as July 1 to July 1 OR July 1 through June 30
Mr. and Mrs. Jones purchased a residence for $270,000. After living in the home for one year they sold it for $250,000. The amount of deduction that can be taken for this capital loss for federal income tax purposes is:
Nothing A loss on the sale of a residence is not deductible under the federal tax laws
If an out-of-state resident was to ask when the first installment of the county real property taxes becomes due, you should answer:
November 1st The first installment of county property taxes becomes DUE on November 1.
Real estate taxes for the coming year become a lien on the real property:
On January 1st each year Taxes become a lien on January 1 of each year
Book value of an income producing property, for tax purposes, is best described as the:
Original cost of the land and buildings, plus the cost of any additions, less any depreciation. The book value is the cost plus capital improvements less any depreciation taken or allowed.
Tax consciousness with respect to real estate transactions should take place:
Prior to the purchase An investor must be tax conscious before he makes any purchase of property
The cost basis of a single family residence can be adjusted for which of the following?
Room or patio addition A room addition would be added to the cost basis of the property
Which of the following sales would result in ordinary income in relation to income tax?
The sale of subdivision homes The developer of a subdivision tract is usually considered a dealer and any sales of the homes would be ordinary income.