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18 Cards in this Set
- Front
- Back
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Which of the following is a tax-deductible expense resulting from home ownership?
A. operating expenses B. depreciation C. mortgage interest D. energy use |
C. mortgage interest
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The $250,000/$500,000 exemption for capital gains applies only to:
A. residential single-family properties B. apartment buildings C. principal residences D. vacation properties |
C. principal residences
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Discount points paid by a borrower to obtain a conventional cortgage loan to purchase a principal residence:
A. are not deductible by the borrower as interest B. are deductible by the borrower as interest C. increase the basis of the new residence D. decrese the basis of the new residence |
B. are deductible by the borrower as interest
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A real estate commission paid by a seller:
A. may be deducted from the selling price as a selling expense in calculating the amount realized in the sale of a principal residence B. is deductible from ordinary income (wage income) by the seller when itemizing tax deductible expense C. increases the basis of the residence sold D. decreases the basis of the residence sold |
A. may be deducted from the selling price as a selling expense in calculating the amount realized in the sale of a principal residence
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A mortgage prepayment penalty paid by a borrower as a requirement for early loan payoff:
A. may be deducted as interest in the year paid B. may be deducted as interest over a five-year period C. may only be deducted from selling price as a selling expense D. may not be taken as a deduction for any purpose |
A. may be deducted as interest in the year paid
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To qualify for the $250,000 capital gains exclusion:
A. one of the taxpayers must be over 55 years old B. the taxpayers must purchase a new home of equal or greater value within the next 24 months C. the taxpayers must use the rollover rule D. The property must have been the tax payer's principal residence for two of the previous five years |
D. The property must have been the tax payer's principal residence for two of the previous five years
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Which of the following married couples filing a joint return will NOT qualify for the $500,000 capital gains exemption?
A. a couple lived and owned the property for the past seven years B. recently married, one spouse lived in and owned the property for the past four years and the other spouse moved into the property three years ago. They married one year ago. C. a couple owned the property for the past four years. One of the spouses has spent the past two years in a nursing home. The other spouse has remained living in the property. D. a couple lived in the home for one years. One spouse owned and occupied the property for five years before they were married. The other spouse moved in one year ago. |
D. a couple lived in the home for one years. One spouse owned and occupied the property for five years before they were married. The other spouse moved in one year ago.
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Which of the following is a benefit depreciation provides?
A. tax credit B. tax deduction C. tax evasion D. tax deferment |
B. tax deduction
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Deductible expenses for a business property include all of the following EXCEPT:
A. advertising B. utilities C. mortgage principal D. insurance |
C. mortgage principal
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Raul Ramirez and Sarah Gildar trade office buildings. In the trade, Raul receives $20,000 in cash in addition to Sarah's office building. With regard to this transaction, which of the following is correct?
A. the transaction does not qualify as a tex-free exchanmge B. the cash Raul receives is called boot and is taxable for the year in which the exchange occurs C. the exchangors, Raul and Sarah, exchange basis in the traded properties D. the cash Raul receives is deductible for the year the exchange occurs |
B. the cash Raul receives is called boot and is taxable for the year in which the exchange occurs
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The basis of property received in a tax-free exchange is:
A. the basis as it was to the prior owner at the time of the exchange B. the average of the difference in the basis of all properties exchanged C. the same basis as the basis of the properties exchanged D. the value of the property received in the exchange |
C. the same basis as the basis of the properties exchanged
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In 1993, Ed and Margaret take advantage of the low interest rates to refinance their existing 30-year, 13.5 percent mortgage with a 15-year, 9.5 percent mortgage on their present home. They pay $1,500 in discount points to refinance this loan. How will the cost of these points be treated in their income tax?
A. the cost is added to the basis of their home B. since all discount points are fully deductible in the year paid, they may deduct the $1,500 fron their 1993 income C. they may deduct only $100 per year D. there is no deduction benefit at all |
C. they may deduct only $100 per year
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The maximun capital gains tax rate is:
A. 10 percent B. 20 percent C. 28 percent D. 39.5 percent |
B. 20 percent
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Victor and Valerie own a vacation property at the beach, which they use only one week per year. The property is rented out at fair market value the rest of the year. Which items of this property can they deduct?
A. motgage principal only B. motgage interest only C. mortgage interest, repairs, depreciation, maintenance, and property taxes D. mortgage interest and property taxes only |
C. mortgage interest, repairs, depreciation, maintenance, and property taxes
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Charles and Maria own two properties. One is their principal residence, and the other is a vacation cottage they use three weeks of the year and rent out the rest. What items can they deduct for the cottage?
A. mortgage interest and property taxes B. depreciation only C. repairs D. nothing, as it is a vacation home |
A. mortgage interest and property taxes
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John sell his home. On the sale, John makes a profit of $375,000. How will John be taxed?
A. if John has lived in the property for at least two years, he will not have to pay taxes on the profit B. if John has lived in the property for at least two years, he will only be taxed on $125,000 of the profit C. if John is over 55 years old, the first $125,000 of profit will be exempt from taxes D. the first $500,000 profit on a principle residence is always exempt |
B. if John has lived in the property for at least two years, he will only be taxed on $125,000 of the profit
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If someone makes a profit on the sale of real estate, the profit is called:
A. a real gain B. a capital gain C. disintermediation D. a miracle |
B. a capital gain
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Which of the following statements is INCORRECT regading the capital gain exemption for owner-occupied properties?
A. the exemption amount is $250,000 for single taxpayers B. the exemption is $500,000 for married cuoples filing jointly C. the taxpayer must have occupied the property for one of the three years preceding the sale D. the tax payer must have occupied the propert for two of the five yeras preceding the sale |
C. the taxpayer must have occupied the property for one of the three years preceding the sale
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