Ch. 18 Taxes Affecting Real Estate

Question 1

The owner’s original cost plus buying expenses plus capital improvements.

Answer 1

adjusted basis

Question 2

(tax) According to the value; in proportion to worth.

Answer 2

ad valorem

Question 3

Worth established for each unit of real property for tax purposes by a county property appraiser.

Answer 3

assessed value

Question 4

Money or other property that is not like-kind, which is given to make up any difference in value or equity between exchanged properties.

Answer 4

boot

Question 5

The profit from the sale of an asset, including real property.

Answer 5

capital gain

Question 6

A loss in value for any reason; a deduction for tax purposes.

Answer 6

depreciation

Question 7

1

Answer 7

exempt

Question 8

Legislation that authorizes county property appraisers to assess land used for agricultural purposes according to its current value as agricultural land.

Answer 8

Green Belt Law

Question 9

Real property that is owned by a unit of government and is not subject that taxation.

Answer 9

Immune

Question 10

The fair market value.

Answer 10

just value

Question 11

A unit of money used to specify a property tax rate ($1 for each $1,000 of taxable value).

Answer 11

mill

Question 12

Property subject to taxation, but the owner is partially relieved of the burden.

Answer 12

partially exempt

Question 13

Taxes levied against properties to pay for all, or part of, improvements that will benefit the properties being assessed.

Answer 13

special assessments

Question 14

The assessed value less allowable exemptions resulting in an amount to which the tax rate is applied to determine property taxes due.

Answer 14

taxable value

Question 15

An investment that shields items of income or gain from payment of income taxes; a term used to describe some taxa advantages of owning real property (or other investment), including postponement or even elimination of certain taxes.

Answer 15

tax shelter

Question 16

1. In Florida, real property taxes are levied on a
   a. county fiscal-year basis.
   b. calendar-year basis.
   c. fiscal-year basis.
   d. quarterly basis.

Answer 16

B

Question 17

2. Each year in Florida, property taxes for the previous year become delinquent on
   a. January 1.
   b. April 1.
   c. November 1.
   d. December 31.

Answer 17

B

Question 18

3. The first step in protesting the assessed value of real property is to
   a. contact the county property appraiser or a representative.
   b. contact the county tax collector or a representative.
   c. contact the Value Adjustment Board.
   d. file suit against the Value Adjustment Board.

Answer 18

A

Question 19

4. The Value Adjustment Board is composed of
   a. the city manager, property appraiser, and three other elected officials.
   b. three school board members and two county commissioners.
   c. one school board member, two county commissioners, and two citizen members.
   d. five school board members and two county commissioners.

Answer 19

C

Question 20

5. You have been granted homestead tax exemption. Your assessed property value is $65,000. What is your taxable property value for county taxes?
   a. $65,000
   b. $60,000
   c. $40,000
   d. $25,000

Answer 20

D

Question 21

6. What would be your city and county property taxes if the property assessment is $38,000, you are a Florida resident receiving homestead tax exemption, and the total tax rate is 28 mills?
   a. $364
   b. $380
   c. $429
   d. $924

Answer 21

A

Question 22

7. A 25 percent service-disabled veteran, who is 75 years of age, has been granted a homestead exemption on his $270,000 residence. How much is his total homestead exemption for county taxes?
   a. $25,500
   b. $30,000
   c. $55,000
   d. Totally tax-exempt

Answer 22

C

Question 23

8. In arriving at a just value for agricultural property, the highest and BEST use
   a. is not a factor
   b. of the property must be for agricultural purposes only.
   c. discourages speculative investing in agricultural land.
   d. encourages speculative investing in agricultural land.

Answer 23

A

Question 24

9. Which statement is FLASE concerning Florida’s Green Belt Law?
   a. The law is intended to protect owners of agricultural property.
   b. Farmers’ lands are shielded from excessive taxation.
   c. The law has been strengthened by qualifying agricultural land annually.
   d. The law intended to promote open green spaces along our nation’s interstates.

Answer 24

D

Question 25

10. If a lot frontage is 100 feet, street paving costs are $40 per running foot, and the city will pay 25 percent of paving costs, what will be the assessment to the property owner? a. $1,000 b. $1,500 c. $3,000 d. $4,000

Answer 25

B

Question 26

11. A widow owns a home in Gainesville, Florida, in Alachua County. The city tax rate is 9.3 mills, the county rate is 9.7 mills, and the school board tax rate is 6 mills. The woman has homestead her principal residence . Her home has been assessed at $178,000. The amount of savings in property taxes realized by all allowable tax exemptions is a. $1,100.00. b. $1,112.50. c. $1,250.00. d. $1,262.50.

Answer 26

B

Question 27

12. Current state law allows the buyer of property tax certificates to collect interest up to a maximum of a. 12 percent. b. 18 percent. c. the tax rate in each county. d. allowable interest voted by the residents of each county.

Answer 27

B

Question 28

13. A county or city millage rate is determined by a. taking into account the operating budgets of the various government departments within the city or county. b. majority vote of the registered voters. c. the mayor or county commissioners after the period for filing a protest has expired. d. the State Legislature.

Answer 28

A

Question 29

14. In 2010, a taxpayer had a $20,000 gain from the sale of investment property A, a $19,000 loss from the sale of investment property B, and a $5,000 loss from the sale of his principal residence. All three properties were owned for more than 12 months. The taxpayer's only other income was his $50,000 salary. What is his 2010 total income for tax purposes, using just this information? a. $46,000 b. $47,000 c. $50,400 d. $51,000

Answer 29

D

Question 30

15. 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. The homeowners will not pay capital gains tax if at least one of them is older than 55. b. Up to $125,000 of the excess profit will be taxed as a capital gain. c. The excess gain will be taxed at the current applicable capital gains rate. d. The excess gain will be taxed at the homeowner's income tax rate.

Answer 30

C

Question 31

16. The maximum amount of profit that may be excluded from taxation on the sale of a home for a qualifying couple, filing separately, is a. $125,000. b. $150,000. c. $250,000. d. $500,000.

Answer 31

C

Question 32

17. Tax advantages of homeownership do NOT include a. a tax deduction of property taxes paid. b. penalty-free withdrawal 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 married couples filing a joint return. d. a tax deduction of homeowners hazard insurance.

Answer 32

D

Question 33

18. For tax purposes, when the installment sale method is used a. gain is reported as payments are received. b. gain or loss is reported as payments are received. c. gain must be deferred. d. gain or loss must be deferred.

Answer 33

A

Question 34

19. Which item is NOT a deductible expense for an income-producing property? a. Depreciation b. Reserve for replacement c. Hazard insurance d. Mortgage interest

Answer 34

B

Question 35

20. A tax-sheltering real estate investment is one in which a. debt service is greater than net operating income. b. the secondary purpose is the productivity of the property. c. the primary purpose is reduction of personal taxable income. d. the amount of depreciation taken for tax purposes is greater than the actual depreciation of the property.

Answer 35

D