Ch. 31 - Income Tax Issues Flashcards
_____ - The sale price of the property minus the costs of the sale.
Amount realized
____ - A measurement of how much is invested in the property for tax purposes.
Basis
_______ - The initial or beginning basis, plus capital improvement, minus exclusions, credits or other amounts received.
Adjusted basis
A single seller can exclude up to ______ of gain and a couple can exclude up to $500,000. The exclusion can be used once every ______ .
$250,000, two years
What tax deduction can an owner of an income-producing property take that the owner of a personal residence cannot take?
Depreciation
One property can be exchanged for another property regardless of the property type, as long as it is held as an investment or for use in a trade or business. This is known as a ______ .
like-kind exchange
List three kinds of property eligible for like-kind exchange.
Commercial property
Industrial property
Leaseholds greater than 30 years
In a like-kind exchange, any cash or relief one party receives in addition to the actual property is called _____ . The person who receives the _____ has a net gain and must ________ .
boot, pay taxes on it
Debt on mortgages taken out on or before October 13, 1987 are known as a _____ .
grandfathered debt
________ is a mortgage that was taken out after October 13, 1987 to buy, build or substantially improve a qualified home - defined as a main or second home.
Home acquisition debt financing
A low-income household is defined as one having an income of ___ percent or less of the area median adjusted for household size.
60
A low-income household is defined as one having an income of ___ percent or less of the area median adjusted for household size.
60
What is the class life for residential and non-residential buildings?
Residential is 27.5 years.
Non-residential is 39 years
_______ means that the depreciation is computed by dividing the building’s cost by the number of years of its class life.
Straight-line depreciation
