Chapter 18: Real Estate Investment Flashcards
All investors desire their investments to increase in value. However,
The more the investor stands to gain, the greater the risk that the investor may lose
Two of the rewards that investments offer are…
Income and tax benefits
And investor invest in 15 diversified bond funds. This is an example of an investment in…
Debt
A real estate investment can take a long period of time to sell. For the investor, this means the real estate is…
Relatively illiquid
Compared to a stock portfolio, a real estate investment would be considered…
A more management intensive investment
Six investors purchase a shopping center. One investor manages the tenants and another handles the marketing and leasing. Two investors manage accounting and finance, and the remaining to run the management office. This is a possible example of…
A general partnership
The taxable income produced by an income property is…
Gross income minus expenses minus building depreciation
As a general rule, deriving taxable income on an investment property, it is legal to…
Deduct interest payments from income
Which of the following is true of the tax treatment of a principal residence?
The owner may be able to exclude capital gain from taxable income on the property is sold
An investment property seller pays $14,000 in closing costs. These costs…
May be deducted from the sale price for gains tax purposes
Capital gain tax is figured by multiplying one’s tax bracket times…
The difference between net sale proceeds and adjusted basis
Cash flow is a measure of how much pretax or after-tax cash and investment property generates. To derive cash flow it is, therefore, necessary to exclude…
Cost recovery expense
One way investors measure the yield of an investment is by…
Dividing cash flow by the investor’s equity
