Chapter 17: Real Estate Investments and Business Opportunity Brokerage

Question 1

Capital Gain/Loss

A capital gain is an ________ in the value of an asset that gives it a higher value than the cost of buying it

Answer 1

increase

Question 2

Capital Gain/Loss

When is capital gain realized?

Answer 2

When the property sells for more than it was bought

Question 3

Capital Gain/Loss

When is a capital loss realized?

Answer 3

When there is a decrease in the value of an asset that gives it a lower value than the cost of buying it

Question 4

True of False

Mortgage payments, called debt service, are considered an operating expense

Answer 4

False

Mortgage payments, called debt service, are NOT considered an operating expense

Question 5

Depreciation

Tax law allows owner of residential and low-income investment properties to depreciate a portion of their investment over ______ years

Answer 5

27.5

Question 6

Depreciation

The owners of nonresidential investment properties may depreciate a portion of their investment over ___ years

Answer 6

39

Question 7

Depreciation

What are the depreciation schedule on residential and nonresidential properties respectively

Answer 7

27.5 years residential and 39 years nonresidential