A-6 Real Estate Investment & Taxation Flashcards
The use of borrowed money to finance and investment calculating a profit or loss will result not only from the investment but the borrowed money as well
Leverage
The net spendable income from an investment after operating and fixed expenses including debt service
Cash flow
A phrase commonly used to describe an investment, such as real estate, sheltered by deductions for cost recovery, taxes and interest.
Tax shelter
The corresponding reduction of principal and growth of equity on the mortgage through amortized payments.
Equity build up
An investment, usually a long term, that keeps pace with inflation.
Inflation hedge
The rate of an investment’s growth mathematically calculated on the basis of projected cash flow from the initial investment.
Internal rate of return
When relieved of a debt, individuals will receive a 1099 and must reported as income on their tax return
Debt relief
The investors percentage yield based on our properties income production
Rate of return
A partnership where two or more people pool their resources for investment but only one of them organizes and operates the organization “syndication”. The passive investors called “limited partners” benefit by sharing in the profits but not the losses. Losses are taxed at the individual level and avoid corporate tax
Limited partnerships
SEC
Federal securities and exchange commission
Two or more investors conduct a business; each partner shares in the profits and decision-making. It is possible for a partner to lose real and personal property.
General partnership
And artificial person, or legal entity, consisting of one or more individuals and managed by a Board of Directors
Regular C corporation
Which investment structure in Falls double taxes?
Regular C Corporation
Taxable profits realize from selling capital assets such as rental property, band, equipment and stocks.
Capital gains
What is the formula for capital gains
Basis minus adjusted sales price
