Legal and Tax Implications Flashcards
7 cards from real Real Estate Investing practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Legal and Tax Implications flashcards as text
Under the Fair Housing Act, which of the following is a protected class at the federal level?
Answer: National origin
The federal Fair Housing Act protects race, color, national origin, religion, sex, familial status, and disability — national origin is explicitly listed.
What is the residential depreciation period for rental properties under current US tax law?
Answer: 27.5 years
The IRS requires residential rental property to be depreciated using the straight-line method over 27.5 years.
An investor purchases a rental property for $300,000. The land is valued at $50,000. What is the depreciable basis?
Answer: $250,000
Land cannot be depreciated, so the depreciable basis is the purchase price minus the land value: $300,000 − $50,000 = $250,000.
Which legal doctrine allows a court to 'pierce the corporate veil' of an LLC?
Answer: When the owner commingles personal and business funds
Courts may pierce the veil and hold owners personally liable if they fail to treat the LLC as a separate entity, such as by commingling funds.
What is a 'quiet title' action in real estate?
Answer: A lawsuit to resolve competing claims or clouds on a property's title
A quiet title action is a court proceeding used to establish clear ownership and remove any adverse claims, liens, or encumbrances clouding the title.
For a married couple filing jointly, what is the capital gains exclusion on the sale of a primary residence under IRC Section 121?
Answer: $500,000
Married couples filing jointly can exclude up to $500,000 of capital gains on the sale of a primary residence if they meet the two-year ownership and use tests.
A landlord enters a tenant's apartment without notice to inspect a minor repair. This most likely violates the tenant's right to:
Answer: Quiet enjoyment
The right to quiet enjoyment guarantees tenants undisturbed possession of their unit; landlords generally must provide 24-48 hours' notice before entry.