Unit 3 Flashcards
Which of these is not a cost or expense of owning a home? A) Taxes on personal property B) Interest paid on borrowed capital C) Homeowners insurance D) Maintenance and repairs
A) Taxes on personal property
Homeowners may deduct which of the following expenses when preparing their income tax return?
A) Interest paid on maintenance and repairs
B) Real estate taxes
C) Insurance premiums
D) Flood insurance premiums
B) Real state taxes
A couple paid $56,000 for their property 20 years ago. Today, the market value is $119,000 and they owe $5000 on their mortgage. Regarding the situation, which of these is true?
A) The $114,000 difference between the market value and the amount owed on the mortgage is their equity.
B) The $63,000 difference between the original investment in the market value is their tax basis.
C) The $63,000 difference between the original investment and the market value will be used to compute the capital gains.
D) The $114,000 difference between the market value and the mortgage is their replacement cost
A) The $114,000 difference between the market value and the amount owed on the mortgage is their equity
A building that is remodeled into residential units and is no longer used for the purpose for which it was originally built is an example of? A) Urban homesteading B) Planned unit development C) A converted- use property D) A modular home
C) A converted use property
A high-rise development that includes office space, stores, theaters, and apartment units is an example of
A mixed- use development (MUD)
Each room of a house was pre-assembled at a factory, driven to the building site on a truck, and then lowered onto its foundation by a crane. Later, workers finished the structure and connected plumbing and wiring before the owners moved in. What word would best describe this type of home?
Modular
A single woman bought a home 18 months ago and is now selling because she found a new job in another city. A married couple filing joint taxes has owned a nine-bedroom home for three years. Now, the couple wants to move to a small condominium unit. A single man owned his home for 17 years, sold it, and will use the proceeds from the sale to purchase a larger house. Based on these facts, which of these people is entitled to the $500,000 capital gains exclusion?
The married couple
When married homeowners who file jointly realize a profit from the sale of their home that exceeds $500,000, which of these is true?
A) The gain exceeding $500,000 will be taxed at the current applicable capital gains rate.
B) The homeowners will not pay capital gains tax if they are over 55.
C) Up to $125,000 of the eaves profit will be taxes as a capital gain.
D) The excess gain will be taxed at the homeowners’ income tax rate.
A) The gain exceeding $500,000 will be taxed at the current applicable capital gains rate.
Theft, smoke damage, and damage from fire are covered under which type of homeowners insurance policy?
Basic form
One result of the capital gains tax law is that MOST homeowners
a. will pay capital gains tax at an 8% lower rate on their home sales.
b. may build more equity in their primary residence.
c. may use the $250,000 or $500,000 capital gains exclusion if they lived in the property for two out of the last five years.
d. will be permitted to use the $125,000 over- 55 exclusion more than once.
c. may use the $250,000 or $500,000 capital gain exclusion if they lived in the property for two out of the last five years.
In determining whether a prospective buyer can afford a certain home purchase, lenders will consider
a. ethnicity of the buyer
b. all of these
c. address of the home
d. credit score
d. credit score
Tom, an art history professor owned and lived in a home in Dubuque, Iowa, for the past four years. He spends a year in Italy after which he decides to sell his home. in Dubuque and live in Rome. If Tom is single, he can claim
the $250,000 capital gains exemption.
An unmarried homeowner has $80,000 in equity in his primary residence of three years. The owner sells the residence for $135,000. The broker’s commission was 5.5%, and other selling expenses amounted to $1,200. What is the owner’s taxable gain on this transaction?
$0
A man incurs the following expenses: $9,500 in interest on a mortgage loan on his residence, $800 in real estate taxes plus a $450 late payment penalty, and a $1,000 loan origination fee paid in the course of purchasing his home. How much may be deducted from his gross income?
a. 9800
b. 10500
c. 11750
d. 11300
d. $11,300
A community that merges housing, recreation, and commercial units into one self- contained development is called a
planned unit-development (PUD)
