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Real Estate > Concepts & Responsibilities of Homeownership > Flashcards

Concepts & Responsibilities of Homeownership Flashcards

1
Q

What are the 7 types of Homeownership?

A

1.) Single-Family Home
2.) Condominium
3.) Cooperative
4.) Townhouse
5.) Planned Unit Development
6.) Multi-Family Homes
7.) Timeshare

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2
Q

Standalone house where the owner owns the house and land:

A

Single-Family Home

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3
Q

Includes ownership of the unit itself and a share of the interest in the common elements, but not the land that the property sits on:

A

Condominium

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4
Q

Rather than owning the unit itself, owners have shares of stock in the entity that owns the property:

A

Cooperative

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5
Q

Owners own the dwelling & the land it sits on, but might also share common elements like condominium owners do. The major difference between this & a condominium is the conveyance of the land with the residence by the deed:

A

Townhouse

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6
Q

Regular fees used to pay for things like the upkeep of common community areas, road repairs, and structural maintenance:

A

Assessments

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7
Q

Monthly mortgage payments for repayment of the loan typically include PITI:

A

P: principal
I: interest
T: taxes
I: insurance

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8
Q

Taxes on the profit a person makes by selling an asset, such as a house:

A

Capital gains taxes

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9
Q

A benefit enjoyed by homeowners who sell their principal residence:

A

Capital gains exemptions

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10
Q

Married homeowners may exclude up to the 1st $500,000 of profit on the sale of a primary residence & single homeowners may exclude up to the 1st $250,000

A

~ Universal exclusions provided by the Taxpayer Relief Act of 1997
~ Reusable every 2 years after the sale

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11
Q

How can a taxpayer become eligible for the capital gains exclusion?

1 of 2 Ways

A
  • Taxpayer must have owned & occupied the home as a principal residence for at least 2 of the 5 years preceding the sale
  • Years may be aggregate - not necessarily continuous
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12
Q

How can taxpayer become eligible for capital gains exclusion?

2 of 2 Ways

A

Homes sold for profit of < $250,00 or $500,000 for joint files don’t require the owners to file an info return reporting the sale of their principal residence

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13
Q

This right is automatic and protects homeowners from claims by creditors being made against their homes, preventing any eviction by these creditors:

A

Homestead Rights

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14
Q

What are the exemptions to the homestead rights?

A

~ Mortgage lenders b/c the homestead itself is used as collateral

~ Tax liens

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15
Q

Interest paid in monthly payments is always paid in:

A

Arrears

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16
Q

Means it is paid after it’s received/issued.

A

Paid in arrears

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17
Q

What do owners in co-op buildings actually own?

A

Shares of stock in the co-op corporation

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18
Q

Major difference between a condominium & a townhouse is that…

A

townhouse owners generally own the land below their unit

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19
Q

How can the difference between a condo & a townhome be verified?

A

By the legal description in the deed

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20
Q

Usually include the unit & the land:

A

Townhouses

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21
Q

Usually include the unit only:

A

Condos

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22
Q

A subdivision or development that includes single-family dwellings along with some common elements such as parks, pools, community recreational centers, and/or golf courses:

A

Planned Unit Development (PUD)

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23
Q

What do PUD owners actually own?

A

Their lot & a share in the common elements

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24
Q

Dwellings that are built in a factory (in accordance with federal building codes) and then delivered to the site once complete

A

Manufactured homes

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25
Q

Buildings with more than four units:

A

Commercial real estate

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26
Q

What type of property has multiple owners and is typically located in a recreational environment?

A

Timeshare

27
Q

How is timeshare ownership different from other kinds of ownership?

A

Owners only get the right of possession for a certain period of time.

28
Q

Provides ownership of the unit itself:

A

Condominium Ownership

29
Q

The homeowners own individual units and have joint ownership of the common areas:

A
30
Q

The form of ownership is stock:

A

Cooperative Ownership

31
Q

Mobile homes, doublewides, and trailers:

A

Manufactured Homes

32
Q

Dwellings built in a factory and then delivered to the site once complete

A

Manufactured Homes

33
Q

Residents receive a proprietary lease for one of the units:

A

Cooperative Ownership

34
Q

The homeowners own individual units and have joint ownership of the common areas:

A

Condominium Ownership

35
Q

The building and the land are owned just as in a single family dwelling; however, there are separate residences in the building:

A

Multi-family Homes

36
Q

Describe the IRA withdrawal tax benefit for 1st time homebuyers

A

1st time homeowners may be able to w/draw up to $10,000 penalty free from their tax deferred individual retirement account to go towards down payment

37
Q

The profit received from selling a capital asset

A

Capital Gains

38
Q

What is a benefit enjoyed by homeowners who sell their primary residence

A

Tax exemptions on capital gains

39
Q

The loss incurred from selling a capital asset is referred to as…

A

Capital Loss

40
Q

Include all of taxpayer’s tangible property - real estate, investment properties, & equipment

A

Assets

41
Q

The IRS imposes taxes on all forms of _______

A

Capital Gains

42
Q

How do you calculate capital gain in real estate?

A

Sales Price - (purchase price + cost of improvements) + Total Depreciation - Expenses = Gain

43
Q

Why is depreciation omitted when calculating capital gains on the sale of a primary residence?

A

B/c homeowners get a tax break on the sale of a primary residence

44
Q

The length of time a property is held is referred to as:

A

the holding period

45
Q

The amount of time between the day a property is bought & the day it is sold:

A

The holding period

46
Q

Holding period is shorter than 1 year

A

Short-term holding period

47
Q

Determines whether a capital gain is taxed as a short-term or long-term gain

A

The holding period

48
Q

Who is eligible for capital gains tax exemptions?

A

Homeowners selling their primary residences

49
Q

Created certain exclusions from capital gains taxes for homeowners:

A

The Taxpayer Relief Act of 1997

50
Q

Lets an investor sell a property, reinvest the proceeds in a brand new property, and defer all capital gain taxes:

A

1031 Exchange

51
Q

~ Calculated according to the assessed value of real estate:
~ They are collected from each property owner to create revenue to run the local governmental agencies and provide benefits to residents of the community:

A

Ad valorem taxes

52
Q

The value placed on a property by a governmental unit for use in levying annual real estate taxes:

A

Assessed value

53
Q

Removes a percentage or an absolute dollar amount from the assessed taxable value of the property.

A

Exemption

54
Q

This homestead tax exemption will reduce the amount of ad valorem taxes paid on the homestead:

A

Homestead tax exemption

55
Q

How many homesteads can an owner claim under the homestead tax exemption?

A

1

56
Q

Texas law requires school districts to offer a ___________ tax exemption on residence homestead.

A

$100,000

57
Q

Counties are required to offer a _________ exemption if the county collects ______ __ ______ ______ ______ or ______ _______ _______.

A

~ $3,000
~ farm-to-market road taxes or flood control taxes

58
Q

If a homeowner files a homestead exemption for reduced ad valorem taxes, the state of Texas requires the school district to supply an exemption value of:

A

$100,000

59
Q

For homeowners aged 65 or older, the tax authority will establish a based on the previous two years of taxes.

A

“tax ceiling” based on the previous 2 years of taxes

60
Q

Texas law requires school districts to offer a ___________ ___________for people who are over the age of 65 or those who have a disability.

A

$10,000 exemption

61
Q

Ordinary expenses that a person pays in a taxable year that may be subtracted from their taxable income, thus reducing the tax liability on that income:

A

Deductions

62
Q

Most insurance policies cover loss or damage from flooding.

A

FALSE

63
Q

What can a seller typically expect to get when they cancel their insurance after selling their house?

A

A refund

64
Q
A

Real Estate (8 decks)

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