Quiz 18 Taxes Affecting Real Estate Flashcards
The purpose of the Florida Green Belt Law is
A) to protect wetlands from being populated.
B) to protect city and county parks.
C) to protect the Everglades.
D) to protect agricultural land from high taxes.
D) to protect agricultural land from high taxes.
In order to preserve Florida’s farming community, the legislature in 1959 passed the Green Belt Law. This taxes agricultural land at a lower rate than the encroaching cities around the land and preserves the land for future agricultural use.
Susan and John sold the home they had lived in for 18 months. They had previously sold another house in New York, where they had lived for 15 years. They decided to move into an apartment and sell the house because the view is better. They are filing jointly as a married couple, and they sell the property for $500,000. Will they owe any capital gain on the property?
A) No, because they are a married couple, filing jointly, and the exemption is $500,000.
B) No, because they are going to live in an apartment.
C) Yes, because they have deferred gain on the previous home.
D) Yes. Because they have not lived in this home for two of the last five years, they do not meet the exemption requirements.
D) Yes. Because they have not lived in this home for two of the last five years, they do not meet the exemption requirements.
Susan and John will owe tax because they lived in the home for only 18 months. One of the requirements for the exclusion states that the homeowner must have lived in the home as a primary residence for two of the last five years.
Mr. Smith likes to pay his taxes quarterly instead of once a year. If the assessed value on his home is $80,000 and the rate is 3.50 mills, what is his quarterly tax? A) $60 B) $70 C) $280 D) $800
B) $70
$80,000 (assessed value) x .0035 (3.50 mills) = $280 (yearly tax) $280 ÷ 4 = $70 (quarterly tax)
The meaning of exempt property in Florida is
A) the property never has any property tax on it.
B) the property is taxed, but the owner is exempt from paying it.
C) the property is taxed on federal property tax but not state property tax.
D) the property is owned by the city and is not taxed.
B) the property is taxed, but the owner is exempt from paying it.
Exempt or partially exempt properties are properties such as churches and nonprofit organizations that own properties. The county appraiser actually determines the taxable value of the property, but the owners of the property are not required to pay.
Tom sold his home for $140,000, paying a 7% real estate commission. He bought the home for $45,000, paid $2,000 in closing costs, and added a new fireplace and family room for $35,000. After figuring the adjusted basis for this home, what is the amount of taxable gain? A) $35,000 B) $48,200 C) $58,000 D) $95,000
B) $48,200
$45,000 + $2,000 + $35,000 = $82,000 (amount invested in home) $140,000 x .07 = $9,800 (commission for sale of home) $82,000 + $9,800 = $91,800 (adjusted basis) $140,000 - $91,800 = $48,200 (amount of taxable gain)
How much is the total Homestead Exemption for a person who is 65 years of age whose household income does not exceed $20,000? A) $10,000 B) $100,000 C) 50% D) 100%
B) $100,000
Certain counties have an ordinance allowed by Florida law, which gives an additional $50,000 exemption to residents who are 65 or older with a household income of NOT more than $20,000. This would make the total exemption equal to $100,000.
The city wants to pave the road in front of Sam Smith's house. Sam has 110 front feet. The cost to pave is $35 a linear foot, and the city will pay 25% of the paving. What is Sam's cost? A) $1,925.00 B) $2,887.50 C) $962.50 D) $1,443.75
D) $1,443.75
To determine how much the tax will be, take the front footage times the dollar amount. 110 x $35 = $3850 The city will pay 25%, so the homeowners’ share will be 75%. $3,850 x .75 = $2,887.50. When being assessed for roads, the property owner would be charged per front foot, but the owner across the road would bear the cost for his or her half of the assessment. Therefore $2,887.50 ÷ 2 = $1,443.75 would be Sam’s cost.
"Trim" means A) Tax Revenues in Measurement. B) Take Resident's Income in Measurement. C) Truth in Millage. D) Total Revenue in Marketing.
C) Truth in Millage.
Truth in Millage (TRIM) notices are sent to homeowners showing how taxes will be affected if the following year’s budgets are voted and approved.
Paul Smith is not happy with the appraised value of his home. He appealed to the County Appraiser’s office and was turned down. He has also been turned down by the Value Adjustment Board. What can he do next?
A) He can do nothing since the Value Adjustment Board has turned him down.
B) He can appeal to the FREC for relief.
C) He can appeal to the district court in a Certiorari hearing.
D) He can appeal to the Department of Business and Professional Registration.
C) He can appeal to the district court in a Certiorari hearing.
If the previous board and county appraiser have both rejected the homeowner’s request, the homeowner may file suit in the courts after he pays taxes under protest. This is called a Certiorari proceeding which means the court will review the matter.
What is the difference between installment sales and like-kind exchanges?
A) Installment sales are for land only; like-kind exchanges are for real estate only.
B) Installment sales use real estate brokers; like-kind exchanges do not.
C) Installment sales collect payments over a number of years; like-kind exchanges have cash as boot.
D) Installment sales never give the buyer a deed; like-kind exchanges give the buyer a deed.
C) Installment sales collect payments over a number of years; like-kind exchanges have cash as boot.
Installment sales collect payments over a number of years, while like-kind exchanges have cash as boot.
Homestead fraud
A) can result in a 50% penalty for the amount taken.
B) can result in a lien on all properties owned by the person committing fraud.
C) is a felony.
D) can result in a 25% penalty for the amount taken.
A) can result in a 50% penalty for the amount taken.
Florida law states that if it is determined that a person had homestead exemption in the past to which he or she was not entitled, a lien is placed against the property for the amount of the exemption, plus 50% penalty, plus 15% interest per annum for each year during which the exemption was fraudulent.
What is boot?
A) The amount of money after sales expenses have been subtracted
B) The amount of money after vacancy rates have been subtracted
C) The amount of money or personal property is given with an exchanged property
D) The amount of money gained on the sale of a property
C) The amount of money or personal property is given with an exchanged property
When a property is exchanged between two owners in a 1031 Exchange, there may be a difference in value. Any money or property used to make up the difference between the property’s value or equity is called “boot.”
What is the purpose of the “Save Our Homes” Amendment?
A) It provides for multiple housing units for the poor.
B) It provides a restricted rate increase on the value of the property.
C) It provides the federal government a way to tax Florida property.
D) It provides for taxation of agricultural lands.
B) It provides a restricted rate increase on the value of the property.
Save Our Homes limits increases in the assessed value to no more than 3% or the CPI (Consumer Price Index), whichever is less. Thus, once the homestead is established and no marital interest is transferred, the homeowner is protected by the 3% annual cap.
