Real Estate Taxes & Assessments & Income Tax Issues in Real Estate

Question 1

The income that I earn from getting out of bed in the morning and going to work, for example: salary, bonuses, commissions, is called ___________.

Answer 1

Active

Question 2

The income that I earn from rental income is categorized by the IRS as ____________.

Answer 2

Passive

Question 3

The income that I earn from my paper assets is ____________.

Answer 3

Portfolio

Question 4

If I have rental properties, the income that I derive from renting out parking spaces, closets in the basement, my coin op washer/dryer is ____________.

Answer 4

Miscellaneous

Question 5

We are taxed on our real property according to the value of the property, ‘ad valorum’, and the question is which value?

Answer 5

Assessed Value

Question 6

Over how many years can you depreciate a residential property (apartments)?

Answer 6

27.5 Years

Question 7

Over how many years can you depreciate a commercial property (office buildings)?

Answer 7

39 Years

Question 8

What is Depreciation? How many kinds are there? What are they?

Answer 8

A decrease in value. 2 kinds:

Economic (building is actually losing value)

Tax depreciation (tax break given by IRS based on the idea that buildings have a lifespan)

Question 9

What can’t you depreciate?

Answer 9

Land or your home

Question 10

MATH: Depreciation – If you see a depreciation problem, you always have to deduct the cost of the ____________ from the acquisition cost of the property, then divide by the appropriate number of years.

Answer 10

Land

Question 11

How much is the capital gains tax incentive for a single person? Explanation: If a single person buys a home as his/her owner-occupied residence, then sells it after two or more years, the first $____________ is free of capital gains taxation. And for a married couple?

Answer 11

$250,000 / $250k. $500,000 / 500k

Question 12

Husband and wife purchased a house in the 60’s for $50,000. The husband passed on and the wife sold it for $300,000. How much of the profit will be subject to capital gains taxation? And when the government gives tax incentives such as this example / or through depreciation, you would call that ____________.

Answer 12

$0. Tax Shelter

Question 13

MATH: Tax Assessment – What is the assessed value of a property with a market value of $180,000 if the rate of assessment is 20%?

Answer 13

$180,000 x .20 = $36,000

Question 14

Which property types are exempt from real property assessment?

Answer 14

No types are exempt

Question 15

Property types which are completely exempt from real property taxation are ____________.

Answer 15

Religious organizations, Governmental

Question 16

What are some of the most common partial property tax exemptions?

Answer 16

STAR (School Tax Relief)
Seniors
Veterans
Persons with disabilities
Agricultural properties (farms)

Question 17

For purposes of property, tax valuation, a residential condominium would be ____________ property.

Answer 17

Homestead

Question 18

Industrial and commercial parcels and most vacant land are considered ____________ property.

Answer 18

Non-Homestead