Principles: Chapter 13 • Introduction To Taxation

Front 1

Under the concept of __ __, owners of property taxes are based on the value of the home, only.

Back 1

ad valorem

Front 2

Passed in 1978, Proposition 13,
the Jarvis-Gann initiative, limits real property taxes to 1 percent of the full cash value of the real property, plus an amount for local __ and bonds.

Back 2

assessments

Front 3

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for homeowners 1/4:

Mortgage interest deductions are allowed for loans totaling $1 __ max on first and second residences only.

Back 3

million

Front 4

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for homeowners 2/4:

For refinances, the amount owed + 100,000 is the most allowed if you plan on deducting the interest. However, if a refinance loan exceeds the home’s value, a portion of the interest paid is
not __.

Back 4

deductible

Front 5

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for homeowners 3/4:

No tax on gain up to $250,000 for singles and $500,000 for married couples who file joint __. Domestic partners are included.

Back 5

returns

Front 6

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for homeowners 4/4:

Installment sale treatment (taxable income received in the following tax year) is still __.

Back 6

OK

Front 7

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 1/7:

Straight-line depreciation on buildings is 27½ years for residential, and __ years for nonresidential properties.

Back 7

39

Front 8

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 4/7:

Owner of rental real estate can
use up to $25,000 in passive losses from real estate to offset
active or portfolio income if:
1. Is an individual owner of >= __ percent
2. Is __ involved in the management (can use property managers, tho)
3. Has a modified adjusted gross income of $100,000 or __

Back 8

1. 10
2. actively
3. less

Front 9

Under the concept of __ __, owners of property taxes are based on the value of the home, only.

Back 9

ad valorem

Front 10

Passed in 1978, Proposition 13,
the Jarvis-Gann initiative, limits real property taxes to 1 percent of the full cash value of the real property, plus an amount for local __ and bonds.

Back 10

assessments

Front 11

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for homeowners 1/4:

Mortgage interest deductions are allowed for loans totaling $1 __ max on first and second residences only.

Back 11

million

Front 12

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for homeowners 2/4:

For refinances, the amount owed + 100,000 is the most allowed if you plan on deducting the interest. However, if a refinance loan exceeds the home’s value, a portion of the interest paid is
not __.

Back 12

deductible

Front 13

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for homeowners 3/4:

No tax on gain up to $250,000 for singles and $500,000 for married couples who file joint __, and live in their residence for __ years. Domestic partners are included.

Back 13

returns
2

Front 14

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for homeowners 4/4:

Installment sale treatment (taxable income received in the following tax year) is still __.

Back 14

OK

Front 15

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 1/7:

Straight-line depreciation on buildings is 27½ years for residential, and and __ years for nonresidential properties.

Back 15

39

Front 16

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 2/7:

__ property mortgage interest is fully deductible against rental income, with no dollar loan __.

Back 16

Rental
limits

Front 17

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 3/7:

Passive income: rental or pensions
Portfolio income: stocks
Active income: salary

Real estate rentals produce either passive income or __ loss. Passive real estate loss can only be used to offset other passive income, not active or portfolio income such as salaries, commissions, profits, interest, and dividends.

Back 17

passive

Front 18

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 4/7:

Owner of rental real estate can
use up to $25,000 in passive losses from real estate to offset
active or portfolio income if:
1. Is an individual owner of >= __ percent
2. Is __ involved in the management (can use property managers, tho)
3. Has a modified adjusted gross income of $100,000 or __

Back 18

1. 10
2. actively
3. less

Front 19

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 5/7:

If the rental property owner’s modified adjusted gross income
exceeds $100,000, the $25,000 amount is reduced $1 for every
$2 above the $100,000. Any unused passive losses from rental
real estate can be carried forward to reduce future passive income and gain upon __ of the property.

Back 19

sale

Front 20

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 6/7:

Real estate investor can still do a 1031 tax-deferred __.

Back 20

exchange

Front 21

TAX REFORM 1986, TAX REVENUE 1987, TAXPAYER RELIEF1997, for Income Property Owners 7/7:

Installment sale treatment for real estate dealers has been abolished, but its still there for __.

Back 21

investors

Front 22

Boot is defined as unlikely property received in an exchange. Eg of boot: cash, notes, personal property, mortgage __.

Back 22

relief

Front 23

The receipt of boot creates a tax __ on the boot.

Back 23

liability

Front 24

Special assessments are levied to pay for a specific improvement,
such as streets and __.

Back 24

sewers

Front 25

Failure to pay a special assessments can result in a loss in the property owner’s __.

Back 25

title

Front 26

Street Improvement Act of 1911:
Each owner along the street is liable for a pro __ share of the
cost. The owner can pay in full within 30 days after completion, or
the local government can sell bonds to finance the work, giving owners time to pay it back.

Back 26

rata

Front 27

The Mello-Roos Community Facilities Act of 1982 is a special assessment used to finance public services in __ developed areas. Examples of services include waste treatment plants, parks, schools, fire stations, and so on.

Back 27

newly

Front 28

Property taxes in California are levied on a modified ad valorem basis and usually __ when a property is transferred to a new owner.

Back 28

change

Front 29

Prop 13:
Maximum real property tax allowed is 1 percent of full cash value, plus 2 percent annual inflationary factor, plus an additional sum to pay for voter-approved __ that affect the property.

Back 29

bonds

Front 30

If there has been no change in ownership since March 1, __,
the tax year 1975–1976 is the base year for computing full Prop 13 cash
value.

Back 30

1975

Front 31

Prop 13: A change in ownership after March 1, 1975, causes the full
cash value for tax purposes to be increased to the sales price as of the date of __.

Back 31

transfer

Front 32

Real property taxes are paid over a fiscal year beginning July 1 and ending June __. The first installment is due November 1, delinquent on December __, a lien on Jan __.

Back 32

30
10
1

Front 33

Real property tax exemptions include
-$__ on appraised value for homeowners,
-$__ for qualified veterans, and
- special exemptions for senior citizens.

Back 33

7,000
4,000

Front 34

Sometimes the income tax aspects of a sale are more important than the __.

Back 34

price

Front 35

The first $500,000 of gain
is excluded for married homeowners who file joint returns and
live in their main home for more than __ years.

Back 35

2

Front 36

The interest paid on 25% of a 125% home equity loan that exceeds the market value of the home will not be deductible if said funds are used to pay personal debts or __.

Back 36

expenditures

Front 37

Interest is only deductible on loans up to the __ value of the home, or the loan amount + 100,00. Whichever is lesser.

Back 37

market

Front 38

Real property taxes become a lien on __ _.

Back 38

Jan 1

Front 39

Real property reverts to the state if property taxes are delinquent for __ years.

Back 39

5

Front 40

Don't forget the $7,000 exemption is subtracted from the market value to compute the __ value.

Back 40

TAXABLE

Front 41

The second installment of real property taxes is due __ __.

Back 41

Feb 1

Front 42

Property taxes are collected by the __.

Back 42

assessor

Front 43

The transfer tax is only on the actual money that exchanged hands in the transaction, not on __ of previous debt.

Back 43

assumption

Front 44

When a seller carries paper to spread out the taxable gain over a series of years, this is called __ __.

Back 44

installment reporting

Front 45

A homeowner cannot legally take a depreciation tax deduction for that portion of the home used as a __.

Back 45

business

Front 46

Under certain guidelines, which proposition allows homeowners
55 years or older to transfer their property tax basis to another home in the same county?

Back 46

Proposition 60

Front 47

The government person who maintains the property tax rolls is the city or county __.

Back 47

auditor

Front 48

On June __, the tax collector publishes a notice of “intent to sell” the property to the state of California because of unpaid taxes. This sale is not a real sale, but rather what is known as a __ sale. The property owner still owns the real estate, but the owner’s name is entered into a delinquent account book, which begins a __-year redemption period.

Back 48

30
book
five