Unit 14? Flashcards
(25 cards)
Which of the following is NOT an allowable expense deduction on an income producing property?
a) Depreciation.
b) Maintenance costs.
c) Principal payments.
d) Interest expense
c) Principal payments.
If you pay $5,000 in mortgage interest and you are in the 28% tax bracket, how much can you deduct against taxable income?
a) $1,400.
b) $1,080.
c) $1,040.
d) $5,000.
d) $5,000.
Which of the following statements is NOT true regarding capital gains treatment on a personal residence?
a) Single persons filing a tax return are entitled to a $250,000 exclusion.
b) Married filers are eligible for a $5000,000 exclusion.
c) Homeowners must have owned and occupied the property as their residence for at least three of the five years immediately preceding the sale.
d) There is no limit on the number of times the exemption may be used as long as eligibility requirements are met.
c) Homeowners must have owned and occupied the property as their residence for at least three of the five years immediately preceding the sale.
Should be at least 2 years.
A house valued at $205,000 is assessed at 80% of value. If the tax rate is $5.40 per $100, the monthly taxes will be:
a) $738.00
b) $822.00
c) $903.80
d) $997.97
a) $738.00
If the quarterly taxes on a property are $1,750 and the assessed value is $22,000 for the land and $80,000 for improvements, what is the tax rate per $100?
a) $5.42
b) $6.86
c) $7.27
d) $8.35
b) $6.86
Which of the following statements concerning exchanges in real property is true?
a) They are always tax-free.
b) Tax must be immediately paid on any gain.
c) They are tax-favored.
d) They are unlawful.
c) They are tax-favored.
Which of the following is taxable at the time of an exchange?
a) The value of the property over the basis
b) The unadjusted basis
c) Boot
d) Nothing is taxable in an exchange.
c) Boot
Within 180 days of relinquishing a property, the exchanger must:
a) identify the replacement property.
b) report the exchange to the IRS on Form 8824
c) report the exchange on the realized gain.
d) take title to the replacement property.
d) take title to the replacement property.
Depreciation on a property:
a) represents an out-of-pocket expense to an investor.
b) is a reduction against income taxes.
c) increases the property’s basis of value.
d) is not recaptured when the property is sold.
b) is a reduction against income taxes.
Which of the following would NOT be considered a capital improvement?
a) Installation of a new roof.
b) Replacement of the furnace.
c) Addition of a garage.
d) Repair to central air conditioning unit.
d) Repair to central air conditioning unit.
The 1986 Tax Reform Act permits a homeowner to deduct which of the following when filing a federal tax return?
a) Mortgage amortization.
b) Property taxes.
c) Depreciation on a personal residence over 27.5 years.
d) All of the above.
b) Property taxes.
If a $3000,000 office building is built on a lot that cost $75,000 what is the amount of straight- line depreciation the first year?
a) $7,692.
b) $10,909.
c) $11,905.
d) $13,636.
a) $7,692.
The compulsory taxes the government imposes against benefiting property owners for street improvements or road repairs are called:
a) special excise taxes.
b) special assessments.
c) general assessments.
d) capital gains tax.
b) special assessments.
A seller w h o sells his principal residence must have occupied the house for at least what period of time to avoid paying taxes on the gain up to the allowable limit?
a) six months.
b) 12 months.
c) 18 months.
d) 24 months.
d) 24 months.
In regard to senior citizen tax reductions in New Jersey:
a) the senior citizen must occupy the property to qualify.
b) the reduction is $50 per year.
c) the reduction is $450 if both spouses qualify.
d) the senior citizen would not qualify if income exceeds $5,000 per annum.
a) the senior citizen must occupy the property to qualify.
Property taxes may be increased or decreased by adjusting the:
a) assessed value.
b) tax rate.
c) Both of the above are correct.
d) Neither of the above is correct.
c) Both of the above are correct.
The federal income tax law allows an investor to gradually write off his original investment. What method is used?
a) Exchanges.
b) Installment buying.
c) Depreciation.
d) Land contract.
c) Depreciation.
A couple buys a residence for $80,000. During the first year they have expenses of $4,100 in mortgage interest, $4,500 in real property taxes, depreciation of $3,300 and fire insurance of $520. They also added a guest room for $6,400. Deductions on their tax return for the year will be:
a) $6,120.
b) $8,600.
c) $12,520.
d) $1,500.
b) $8,600.
Interest + Property taxes.
Which of the following is NOT an eligible tax deduction on a personal residence?
a) Discount points paid by a purchaser.
b) Depreciation.
c) Property taxes.
d) Mortgage interest.
b) Depreciation.
Local government programs and services are financed primarily through:
a) federal income taxes.
b) state income taxes.
c) state sales taxes.
d) property taxes.
d) property taxes.
A town may recover the costs of curbs or sidewalks by:
a) a state income tax.
b) a sewer assessment.
c) a special assessment.
d) a personalty tax.
c) a special assessment.
To qualify for a depreciation deduction for income tax purposes, the property must be:
a) improved.
b) unencumbered.
c) purchased prior to tax reform.
d) old.
a) improved.
The investor’s down payment represents:
a) debt.
b) capital gain.
c) equity.
d) passive loss.
c) equity.
In Thelma’s last will and testament, she devised a house to her daughter, Louise. After the death of Thelma, if Louis decides to sell the property, the cost basis for tax purposes will be:
a) Thelma’s adjusted basis at the time the gift was made.
b) Thelma’s adjusted basis, after adjusting for inflation.
c) the fair market value of the property at the time of Thelma’s death.
d) the market value of the property at the time of the sale.
c) the fair market value of the property at the time of Thelma’s death.
