you would a) $43,2 id make on the same transaction over the same year 2 year per

Question

you would a) $43,2 id make on the same transaction over the same year 2 year period cotaly? b) $49,250 c) $49,730 d) $42,250 e) None of the above 20. The value of a property capitalization rate. a) Gross income-mortgage payments-expenses b) Gross income-expenses e) NOI-debt service d) Income multiplier e) None of the above 21. Apartments are traditionally depreciated over- a) 39 b) 39.5 e) 31.5 d) 72.0 e) None of the above -years under the 201 7 tax laws 22. AMT for 2017 is a) Alternative Minimum Tax b) Automatic Mortgage Time c) Acquisition Memo Trivalent d) Alternative Depreciation Maximum/Time or Tax e) Automatic Teller Machine 23. A property having an NOI of S5,000 per month and expenses of S2.000/month that sells for S600,000 cash would have a CAP rate equal to a) 6% b) 8.33% c) 1.2% d)8% e)10% . 24. If interest rates increase and "CAP" rates follow due to inflation, the value of a property's while replacement cost stable cashflow to investors a) Will increase/will decrease b) Will decrease/ will increase c) Both are independent of interest rates and cap rates d) Both are independent and not related! e) C and D estate: a) Are smart if held long term and you are in a high tax bracket in early years b) Are smart if you hold short term and you are in a high tax bracket in early years and sell c) Anything over straight-line is recaptured and taxed at ordinary income tax rates when you 25. Accelerated depreciation (more aggressive than straight line) options on commercial real sell

Explanation / Answer

20 Answer b.

There are various methods to get value of property one of this is dividing NOI (Gross income less Expense) by capitalization rate

Here Gross income -Expenses is annual income from property less income loss due to vacant period of property and operating expenses.

Here appropriate capitalization rate is net operating income divide by sales price which can be acquired by sale of same property in the same area.

In this question the option NOI-debt service can not be considered as debt service i.e. expense on debt financing for property is not considered while calculating value of property

21 Answer a.

Apartments are tradinally depreciated over 39 years under the 2017 tax laws

22 Answer a.

AMT stands for Alternative Minimum Tax it recalculates income tax after adding certain tax preference items back into adjusted gross income.        AMT uses a separate set of rules to calculate taxable income after allowed deductions. Preferential deductions are added back into the taxpayer's income to calculate his alternative minimum taxable income after this AMT exemption is subtracted to determine the final taxable figure.

23 Answer e.

CAP = NOI (Net Operating Income)/Property

CAP= $5000/$600,000

CAP=10%

*We will not consider expense of $2000 as NOI is after deducting all expense

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