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20 Cards in this Set
- Front
- Back
- 3rd side (hint)
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If an investor can manage to hold real estate assets for longer than a year, they can benefit from a reduced tax rate on the capital gains (profits). |
True |
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Commercial rental property can be depreciated over 27.5 years using the straight-line depreciation method |
True |
Residential property is depreciated over 27.5 years while commercial property is depreciated over 39 years. |
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Property tax is called an Ad valorem tax because it is said to be based on a determined fair value of the property- not an arbitrary value. |
True |
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A 1031 Exchange is used for primary residences to transfer the Save Our Homes benefit. |
False |
[Section 18 Slide 115] A Like-kind exchange- usually a 1031 exchange, is when the investor sells one property to purchase another exchanging it. It is another way for investors to avoid paying real estate tax. |
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The Greenbelt law exemption is a partial exemption that protects agricultural land from being taxed by higher values base on highest and best use. |
True |
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Properties exempt from property taxes include Public Schools, Municipal buildings, Police headquarters, and Fire Stations. |
False |
These properties are immune from property taxes. Exempt properties are Churches, Church Schools, and Nonprofit Organizations. |
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If a homeowner disagrees with the assessed value of the property, the only course of action to take is to sue the local government. |
False |
Protest procedures for property assessments include meeting with property appraiser, filing an appeal with the Value Adjustment Board, and litigating in Court. |
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Just Value is defined as market value |
True |
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First-time homebuyer can withdraw up to $10,000 from an IRA without paying the early withdrawal penalty to use as a down payment on a home. |
True |
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Special assessments are extra property taxes placed on property for public improvement that benefits the property owner such as street paving, sidewalks, and sewers. |
True |
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Carlotta decided to downsize from a property with a just value of $600,000 but had an assessed value of only 460,000. She bought a new home with a just value of $300,000. Using the Portability provision of the Save Our Home Benefit, what would be the adjusted assessed value of the new home for school taxes? |
$205,000 |
Take the market value (just value) of the new home and divide by the market value of the old home. Take the resulting percentage and multiply by the assessed value of the old home. $300,000/$600,000 = .5 x $460,000 = $230,000 (adjusted value)-$25,000 (additional school tax exemption)=$205,000 |
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Brigg bought a house last year when he paid $5,000 in discount points. Over the past year he also paid $8,575 in mortgage interest, $6,200 in principal payments, $1,300 in property tax , $750 in mortgage insurance, $900 in property insurance, and $1,500 in maintenance. Which expenses are deductible from his federal taxes? |
Discount Points paid of $5,000, mortgage interest of $8,575 and property taxes of $1,850 |
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The Waltens bought their home 50 years ago. For their anniversary, they decided to sell their home and travel the country in a motor home. They only had to pay out a total of $50,000 when they bought their home but were able to sell it for $500,000 (after closing costs). How much would they be taxed on as capital gains? |
$0 |
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Homes in Audrey's neighborhood increased in value by 5% last year while the consumer price index only increased by 4 percent. What's the most that Audrey's home assessed value can increase? |
3% |
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Terry is a widower who is permanently disabled. His homesteaded property has an assessed value of $260,000. What is his taxable value for school taxes? |
$234,000 |
$260,000 - $25,000 regular exemptions - $500 widower exemption - $500 disability = $234,000 |
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Heathcliff owns a property that was assessed to have a just value of $350,000. He is homesteaded with no other exemptions. The county tax is 6 mills, the city tax is 6.5 mills, and the school tax is 7 mills. How much would Gary owe in property taxes? |
$6,025 |
To solve this problem you total The county tax and city tax mills together. 6 mills + 6.5 mills = 12.5 mills. Convert into a decimal: .0125. Take $350,000 applicable homestead exemptions of $50,000 = $300,000 x .0125 = $3,750 taxes due for county and city. Then take $350,000 and subtract school applicable exemptions of $25,000 = $325,000 x .007 (7 mills converted to decimals) = $2,275 taxes due for school. Add $3,750 + $2,275 = $6,025 Total Tax Due |
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Rhonda was charged for paving in front of her house. She owned 100 linear feet which was being charged at $28 a linear foot. The city agreed to pay the first 25% of the cost. How much was Rhonda charged as a special assessment? |
$1,050 |
[Section 18 Slide 80] $28 x 100= $2800 x .75= $2,100 /2 = $1,050
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Patsy purchased an income residential property for $240,000. It cost her $7,200 in closing costs. $30,000 is the value of the land. What is the amount of the yearly depreciation for federal taxes? |
$7,898.18 |
You subtract the value of the land from the depreciable basis and divide by 27.5 to get the yearly depreciation: $240,000 + $7,200 = $247,200- $30,000 = $217,200 w 27.5 = $7,898.18 allowable depreciation per year for federal taxes |
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Frank and Mary own a homesteaded home together with an assessed tax value of $515,000. Frank was in an accident and lost both his legs. How much will their exemption be for county tax? |
$50,500 |
$50,000+$500= $50,500 |
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Garth decided to move out of a small homesteaded home and into a larger more expensive one. The market value of his old home at the time of sale was $250,000, but his assessed value was only $175,000. The just value of the new home was $325,000. Using the Portability provision of the Save Our Home Benefit, what would be the adjusted assessed value of the new home for city taxes? |
$200,000 |
[Section 18 Slide 52] $250,000 (Market Value of old home) - $175,000 (assessed value of old home)= $75,000 amount of assessed value not taxed on old home. $325,000 (Assessed value of new home) - $75,000 = $250,000 adjusted assessed value of the new home. $250,000 - $50,000 (homestead exemptions for city)= $200,000 taxable value for city taxes. |
