Real Estate Math
A home is depreciated for income tax purposes using straight-line depreciation over 27.5 years. The purchase price was $550,000, with $50,000 allocated to land. What is the annual depreciation deduction?
A$18,182✓ Correct
B$20,000
C$16,364
D$22,000
Explanation
Only the improvement (building) is depreciated, not land. Depreciable basis = $550,000 – $50,000 = $500,000. Annual depreciation = $500,000 ÷ 27.5 years = $18,181.82 ≈ $18,182.
Related California Real Estate Math Questions
- A home purchased for $480,000 appreciates at 4% compounded annually. What is its value after 2 years?
- A property has a building-to-land value ratio of 75:25 and a total value of $900,000. What is the depreciable basis (building value) for tax purposes?
- A property's assessed value is $180,000 and the tax rate is $1.25 per $100 of assessed value. What is the annual property tax?
- A buyer takes out a $300,000 loan at 6% annual interest (interest only). What is the first month's interest payment?
- A property is appraised at $320,000. The buyer makes a 20% down payment. What is the loan amount?
- A property sells for $415,000. The buyer puts 10% down and the lender charges a 1% loan origination fee. What is the loan origination fee?
- A house sells for $580,000. Property tax (Prop 13 base rate of 1%) plus $800 in special assessments. What is the first year's total property tax bill?
- A home sold for $550,000. The buyer paid $110,000 as a down payment and financed the rest. What was the loan-to-value ratio (LTV)?
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →