Real Estate Transactions

Question 1

Types of filing status

Answer 1

singe, married-joint, married-separate, head of household

Question 2

Tax return due date

Answer 2

April 15 but you can file for an extension which give you until October 15

Question 3

Realized gain

Answer 3

gain on paper

Question 4

Recognized gain

Answer 4

gain that you pay taxes on

Question 5

Highest Federal Tax bracket on recognized gain

Answer 5

37%

Question 6

States without income tax

Answer 6

Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming

Question 7

Other ways for states without income tax to raise revenue

Answer 7

property tax, sales tax, various fees

Question 8

New Hampshire tax

Answer 8

if you earn more than $2,400 single or $4,800 joint than there’s 5% flax tax

Question 9

What happens if taxpayers sell a property after living there for more than a year?

Answer 9

recognized gain is taxed as capital gain which has a tax of 15% to 20%

Question 10

What happens if taxpayers sell a property after living there for more than 2 out of the last 5 years?

Answer 10

recognized gain is not taxed at all

Question 11

Tax Cuts and Jobs act of 2017

Answer 11

$10,000 cap on deducting real estate taxes as well as state and local income taxes, “qualifying taxes”
reduction from $1m to $750k in the amount of home mortgage interest that can be deducted
(change 2 out of 5 rule to 5 out of 8 but this failed to make it into the final version of the TCJA)

Question 12

Line resulting from the July 2008 Housing and Economic Recovery Act

Answer 12

First-time homebuyer credit REPAYMENT
Form 1040, Schedule 2, Line 10

Question 13

The Housing Assistance Tax Act of 2008

Answer 13

created a new fully refundable tax credit for first time home buyers, Form 5405

Question 14

American Recovery and Reinvestment Act

Answer 14

February 2009, Obama, 10% of purchase price with max $8k home buyers credit, homes purchased on or after January 1 2009, don’t have to repay the credit if you live in the home 36 months

Question 15

Housing and Economic Recovery Act of 2008

Answer 15

July 2008, Bush, 10% of purchase price with max $7,500 home buyers credit, homes purchased on or after April 9 2008, phase out rules single (75k to 95k) and married-joint (150k to 170k) based on AGI

Question 16

Definition of first time home buyer

Answer 16

not bought a property and used it as a home during the last 3 years

Question 17

Difference between 2009 credit and 2008 credit

Answer 17

2008 home buyers credit was an interest free loan while the 2009 home buyers credit was a true credit

Question 18

Is the credit refundable

Answer 18

Yes

Question 19

2008 Law Recapture rule

Answer 19

6 2/3% of the amount of the credit will be added onto the income tax owed for the recapture period (15 years) beginning with the second taxable year following the purchase of the residence
balance of the credit is due in the year in which the residence is sold but the amount of credit due may not exceed the amount of gain from the sale of the residence

Question 20

Worker, Home Ownership, and Business Assistance Act of 2009

Answer 20

10% up to $6,500 for people who lived in a home for 5 of the last 8 years
Home purchased between November 7 2009 and April 30 2010
Need to live in the new home for 36 months

Question 21

HELOC

Answer 21

a loan borrowed against the equity in a home

Question 22

What is adjusted basis

Answer 22

basis + certain improvements to the home

Question 23

Section 121

Answer 23

if the owner lived in a house for 2 out of the last 5 years then the gain from the sale of the property will not be added to the seller’s taxable income