The Webers own three pieces of real estate:
their house, a lakeside cottage, and a tract of
woodland. Which of the following expenses
may be deducted for all three properties on the
Weber’s income tax return?
Detailed Answer
c. All property taxes paid are income tax
deductible. Interest deductions are available
only for one’s first and second homes. Insurance premiums are not deductible.
2
The amount of tax placed on real estate that is
based on the property’s assessment is known as
Detailed Answer
a. Ad valorem means “according to the value.â€
More expensive real estate will pay a higher
ad valorem tax than its neighbor.
3
In most states, no property tax is levied on land
belonging to
Detailed Answer
c. Religious and charitable institutions are
among the most common properties exempt
from taxation.
4
Deed restrictions that forbid future sale of the
property to members of certain ethnic groups
cannot be enforced because they
Detailed Answer
a. Restrictive covenants cannot be used for illegal purposes. If they are, the courts will not
enforce them.
5
When the Franks bought their first home, some
of their costs included payment of points,
establishment of an escrow account, premium
for title insurance, and commission to their
own buyers’ agent. On that year’s income tax
return, they may deduct the
Detailed Answer
a. Points paid for a purchase money mortgage
on one’s own home are immediately
deductible as prepaid interest.
6
The term “walk-through†refers to
Detailed Answer
d. The sales contract should contain a provision
allowing the buyer a walk-through within 24
hours before closing.
7
The applicant for a mortgage may NOT be
asked about his or her
Detailed Answer
a. National origin is one of the protected
classes under the Equal Credit Opportunity
Act. Mortgage interviewers are allowed to ask
about the other items.
8
Samantha Mulder goes to a bank and borrows
money for the purchase of her first home,
thereby becoming a
Detailed Answer
a. The borrower mortgages the property, giving
the lender a claim against the real estate. As
the one who does the mortgaging, she is the
mortgagor.
9
Private land use controls are created through
which of the following?
Detailed Answer
d. Restrictive covenants also known as deed
restrictions are established by the seller and
subsequent owners have the right to enforce
the restrictions. Zoning by cities and land
planning by counties are both examples of
public control of land use.
10
If a person dies leaving no will and no natural
heirs, his or her property passes to
Detailed Answer
b. The state becomes owner of a deceased person’s property in the absence of a will or natural heirs, through the power of escheat.