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What is a disadvantage of Real estate investing?
Unlike stocks and bonds, real estate is not highly liquid over a short period of time
What is Cash flow?
The cash flow is the total amount of money remaining after all expenditures have been paid, including taxes, operating costs, and mortgage payments.
What is Negative Cash flow?
When the cash flow from rents is not enough to cover all expenses
What is the outcome of Pyramiding?
By reinvesting and doubling his or her holdings periodically, it is conceivable that an investor who started out with a small initial cash down payment could own (heavily mortgaged) properties worth hundreds of thousands or millions of dollars. With sufficient cash flow to cover all costs, if market values hold steady or increase, the income derived from such assets could pay off the various mortgage debts and show a handsome profit.
What is the wisest initial investment for a investor?
The purchase of rental income property
In a Exchange, to defer tax on Capital gains, what occurs to the taxation?
The tax is deferred, not eliminated. If the investor sells the property, the capital gains is taxed
What does a Section 1031 allows an investor to do?
allows an investor to sell one investment and buy another outright, with no necessity to find an owner who wants to swap
How long does an investor have to identify intent to purchase under a Section 1031 exchange?
The investor must identify the intended purchase within 45 days of selling the first parcel and complete the purchase within 180 days.
What is done with leftover cash in a boot transaction?
That leftover cash may be immediately taxable, as part of the investor's capital gain on the first property.
How does an investor come to a adjustment basis?
The investor adds to the basis the cost of any capital (physical) improvements subsequently made to the property, and subtracts from the basis the amount of any depreciation claimed as a tax deduction to derive the property's adjusted basis.
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