14 Taxation Flashcards
Ad valorem taxes
Real property taxes
Basis
- Cost basis is the dollar amount assigned to property at the time of acquisition under provisions of the internal revenue code for the purpose of determining gain, loss, and depreciation in calculating the income tax to be paid on the sale or exchange of the property .
- adjusted cost basis is derived after the application of certain additions, such as improvements, and deductions, such as for depreciation.
Capital gain
The amount by which the net resale proceeds of a capital item exceed the adjusted cost basis of the item.
Depreciation
- Decrease in value of an asset that is allowed in computing property value for tax purposes.
- In appraising, a loss in the value of a property improvement from any cause
- Depreciation is curable when it can be remedied by a repair or an addition to the property, and it is incurable when there is no easy or economic way to cure the loss
Estate
The interest held by the owner of property
Reverse exchange
Delayed exchange where the property desired is acquired prior to sale of exchanger’s property.
Sale-leaseback
A transaction in which, at the time of sale, the seller retains occupancy by concurrently agreeing to lease the property from the purchaser.
Supplemental tax bill
Covers the difference between the seller’s assessed valuation and the new valuation based on the sales price.
Proposition 13
- enacted in 1978
- limits annual in valuation to 2 percent
Proposition 58
-allows transfers without reassessment to a spouse or children
Proposition 60
-Allows homeowners over 55 years of age to transfer their assessed valuation to a new residence in the same county
Proposition 90
-Extends Prop 60 to participating counties
1031 exchange
Allows for exchange of personal property, as well as real property
Boot
Is cash received, unlike property or debt relief
