Chapter 19 Flashcards
When a person sells real property for more than it’s cost,that person has received? ____
Capital gain
Tax benefits of owning a home? (3)
Tax deductible interest payments
Tax deductible property taxes
Adjustments to reduce capital gain liability
The profit realized from the sale or exchange of a property are taxed as ordinary income if it is a ______(held for 12 months or less)
Short term capital gain
Held longer than 12 months. Tax rate that applies is currently 15%
Long term capital gain
Purchase price
The amount of the gain realized from the sale of a property depends on this
Basis
Purchase price plus allowable closing expenses
Cost basis
Physical capital improvements that add value to the property or prolong its life
Adjusted basis
Is the amount realized is less than the adjusted basis what has occurred?
Capital loss
Real estate investors can defer taxation of capital gains by exchanging property versus selling it and receiving taxable profit
Tax-deferred exchange
When a property is exchange for another property that is worth substantially more or less, cash or personal property maybe included in the transaction to even out the value of the exchange this Cash personal property is called what?
Boot
“Income”
Gain
When the seller finances the sale of the sellers property Or when the seller is to receive all or some portion of the sales price in a year or years the sale qualifies as this….
Installment sale
Essentially the like kind requirement is met when real estate is exchange for real estate
Like kind proprieties
