Rental Real Estate

Question 1

Active Participation

Answer 1

A lower level of involvement than material participation

Question 2

Advance Rentals

Answer 2

Rents received in advance of the period in for which they are paid

Question 3

Capital Improvements

Answer 3

Include flooring, window coverings, new roof, new plumbing or electrical systems, building additions, and major repairs such as a new driveway, refurbishing stucco, or new landscaping

Question 4

Depreciaiton

Answer 4

Also called cost recovery, the annual deduction allowed for recovering the taxpayer’s cost of the investment property

Question 5

Dwelling Unit

Answer 5

Structure or the part of a structure that is used as a home, residence, or sleeping place by on person who maintains a household or by two or more persons who maintain a common household

Question 6

Material Participation

Answer 6

A measure of taxpayer’s involvement in a business or investment activity related to the federal income tax passive loss limitations

Question 7

Nonresidential Property

Answer 7

Real property that is not residential

Question 8

Repair

Answer 8

Keeping real property in good operating condition. Painting, fixing floors, fixing leaks in plumbing or roof, replacing broken windows.

Question 9

Residential Property

Answer 9

A building or structure in which 80 percent or more of the gross rental income is rental income from dwelling units

Question 10

Security Deposits

Answer 10

Monies deposited with the landlord solely as security for the tenant’s performance of the terms of the lease and which are usually not taxed when received