CMPS - Certified Mortgage Planning Specialist Mortgage and Tax Strategies Questions and Answers

Question 1

A married couple sells their primary residence for a $600,000 profit.
They have owned and lived in the home for the past 10 years.
How much of the capital gain from the sale can they exclude from their taxable income?

Accepted Answer

$500,000

Answer

$0

Answer

$250,000

Answer

$600,000

Question 2

Under the current tax law (post-December 15, 2017), what is the maximum amount of mortgage debt on which a homeowner can deduct interest for a primary residence?

Accepted Answer

$750,000

Answer

$500,000

Answer

$1,000,000

Answer

There is no limit.

Question 3

Which of the following is a requirement for a homeowner to be able to deduct the interest paid on a Home Equity Line of Credit (HELOC)?

Accepted Answer

The funds must be used to buy, build, or substantially improve the home securing the loan.

Answer

The HELOC must be from the same lender as the primary mortgage.

Answer

The homeowner must have at least 50% equity in the home.

Answer

The funds must be used to pay for personal expenses like a vacation or car.

Question 4

A client is purchasing a home and their lender offers them the option to pay 'points' at closing. From a tax perspective, what is the primary benefit of paying these points?

Accepted Answer

They are fully deductible in the year paid, reducing taxable income.

Answer

They reduce the property tax assessment for the first year.

Answer

They increase the cost basis of the home, reducing future capital gains.

Answer

They provide a dollar-for-dollar tax credit against federal income tax.

Question 5

A real estate investor owns a residential rental property. Which of the following expenses related to this property is NOT typically tax-deductible?

Accepted Answer

The principal portion of the mortgage payments.

Answer

The interest portion of the mortgage payments.

Answer

Annual property taxes.

Answer

The cost of repairs and maintenance.

Question 6

To claim the mortgage interest deduction, a taxpayer must:

Accepted Answer

Itemize deductions on their tax return.

Answer

Take the standard deduction.

Answer

Have a mortgage balance of less than $250,000.

Answer

Be a first-time homebuyer.

A married couple sells their primary residence for a $600,000 profit.They have owned and lived in the home for the past 10 years.How much of the capital gain from the sale can they exclude from their taxable income?

A married couple sells their primary residence for a $600,000 profit.
They have owned and lived in the home for the past 10 years.
How much of the capital gain from the sale can they exclude from their taxable income?