Real Estate Ch 23 Quiz

$5,000

A small multifamily property generates $50,000 in rental income, $10,000 in expenses, and $35,000 in debt service. The property appreciates about $25,000 each year. What is the cash flow on this property?

the total amount of spendable income left after expenses.

Cash flow is

depreciation

The primary source of tax shelters in real estate investments comes from which accounting concept?

adjustable basis

A man made an initial real estate investment of $45,000. He subsequently made $20,000 worth of improvements to the property. If the man subtracts depreciation from the initial cost and adds the cost of improvements, what will be the result?

the elimination of capital gains

All of the following are associated with a Section 1031 exchange except

pyramiding

A woman refinanced her house and used the proceeds to purchase two rental properties. This method of increasing her holdings is called

It is a private or public business venture to own property.

Which statement is true about a syndicate?

REMIC

A tax entity created by the Tax Reform Act of 1986 that issues securities backed by a pool of mortgages is a

$75,000

A seller is selling an investment property. The original cost of the property was $80,000. The selling price is $125,000. The seller paid an 8 percent commission and $1,000 in closing costs. Two years ago, the seller made $10,000 worth of improvements to

$39,000

Based on the information in Question 9, what is the seller's total capital gain?

high liquidity

Advantages of an investment in real estate include all the following except

is taxed on that part of the gain in the year the property is sold

The investor who sells property on an installment sale basis

exchange one property for a like-kind property

One method a real estate investor may use to defer capital gains tax is to

boot

As part of a Section 1031 exchange, an investor had to give the other party $11,500 and a 1953 Chevolet. The cash and car are

Using borrowed funds entirely

Which situation would result in the highest degree of leverage?

real estate investment trust

Someone looking for a tax-advantage investment similar to a mutual fund would probably invest in a

assessed valuation of the property

When considering an investment in real estate the prospective investor should consider all of the following except

total amount of income left after all expenses have been paid.

Cash flow is a term that refers to the

pyramiding

Purchasing a property using leverage, refinancing it after it has appreciated, and using the cash from refinancing to purchase additional property is one form of

real estate investment trust

The type of real estate investment that is required by federal law to distribute 95 percent of its income to its shareholders is the