AYPO REAL ESTATE PRINCIPLES OF
REAL ESTATE I QUESTIONS AND
ANSWERS
Ordinances Passed by County Commissioner's Courts and City Councils ANSW✅✅An ordinance is
legislation that is passed by a local municipality and binding on the citizens of that municipality. As
they say with a variety of policies, 'all real estate is local.' As a real estate agent, you will likely get to
know the ordinances and regulations intimately in the areas where you work.
Legal Remedies (Courts of Law) vs. Equitable Remedies (Courts of Equity) ANSW✅✅Because some
remedies in common law were considered too harsh, courts of equity were created to provide relief
to applicants under equitable principles. A court of equity has the ability or flexibility to do what is
considered fair and equal, even when the letter of the law would dictate otherwise. Federal
bankruptcy courts traditionally operated as courts of equity.
Capital Gains Tax Law ANSW✅✅- Almost everything you own and use for personal purposes,
pleasure or investment is a capital asset.
- When you sell a capital asset, the difference between the amount you sell it for and your basis -
which is usually what you paid for it - is a capital gain or a capital loss.
- You must report all capital gains.
- You may deduct capital losses only on investment property, not on property held for personal use.
- Capital gains and losses are classified as long-term or short-term, depending on how long you hold
the property before you sell it. If you hold it for more than one year, your capital gain or loss is long-
term. If you hold it for one year or less, your capital gain or loss is short-term.
- If you have long-term gains in excess of your long-term losses, you have a net capital gain to the
extent your net long-term capital gain is more than your net short-term capital loss, if any.
- The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other
income. For 2020, the capital gains tax rates are split between 0%, 15%, and 20% for most assets
held for a year or longer.
, - If your capital losses exceed your capital gains, the excess can be deducted on your tax return and
used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are
married and filing separately.
- If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry
over the unused part to the next year and treat it as if you incurred it in that next year.
Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred
to line 13 of Form 1040.
Fair Housing Administration (FHA) ANSW✅✅government agency that offers mortgage insurance
to certified lenders. FHA loans service low to medium income borrowers.
The federal Fair Housing Act prohibits discrimination because of race, color, religion, sex, handicap
(disability), familial status, or national origin in the sale, rental, or advertising of dwellings, in the
provision of brokerage services, or in the availability of residential real estate-related transactions.
Equal Credit Law ANSW✅✅The federal Equal Credit Opportunity Act (ECOA) is administered by
the Consumer Financial Protection Bureau (CFPB). This law was enacted in 1974 and makes it
unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit
transaction, on the basis of race, color, religion, national origin, sex, marital status, or age (provided
the applicant has the capacity to contract); to the fact that all or part of the applicant's income
derives from a public assistance program; or to the fact that the applicant has in good faith exercised
any right under the Consumer Credit Protection Act.
If a financial institution fails to comply with the Equal Credit Opportunity Act's Regulation B they can
be subject to civil liability for actual and punitive damages in individual or class actions. Liability for
punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1%
of the creditor's net worth in class actions
The federal Real Estate Settlement Procedures Act (RESPA) ANSW✅✅is also administered by the
CFPB, and was designed to ensure that buyers and sellers in residential real estate transactions
involving a new first mortgage loan have knowledge of all of the closing costs.
Market Value and Market Price ANSW✅✅The market value of a property is the amount the
property, in its current state, should sell for on the open market. The market price is the price that a
property actually sells for.
REAL ESTATE I QUESTIONS AND
ANSWERS
Ordinances Passed by County Commissioner's Courts and City Councils ANSW✅✅An ordinance is
legislation that is passed by a local municipality and binding on the citizens of that municipality. As
they say with a variety of policies, 'all real estate is local.' As a real estate agent, you will likely get to
know the ordinances and regulations intimately in the areas where you work.
Legal Remedies (Courts of Law) vs. Equitable Remedies (Courts of Equity) ANSW✅✅Because some
remedies in common law were considered too harsh, courts of equity were created to provide relief
to applicants under equitable principles. A court of equity has the ability or flexibility to do what is
considered fair and equal, even when the letter of the law would dictate otherwise. Federal
bankruptcy courts traditionally operated as courts of equity.
Capital Gains Tax Law ANSW✅✅- Almost everything you own and use for personal purposes,
pleasure or investment is a capital asset.
- When you sell a capital asset, the difference between the amount you sell it for and your basis -
which is usually what you paid for it - is a capital gain or a capital loss.
- You must report all capital gains.
- You may deduct capital losses only on investment property, not on property held for personal use.
- Capital gains and losses are classified as long-term or short-term, depending on how long you hold
the property before you sell it. If you hold it for more than one year, your capital gain or loss is long-
term. If you hold it for one year or less, your capital gain or loss is short-term.
- If you have long-term gains in excess of your long-term losses, you have a net capital gain to the
extent your net long-term capital gain is more than your net short-term capital loss, if any.
- The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other
income. For 2020, the capital gains tax rates are split between 0%, 15%, and 20% for most assets
held for a year or longer.
, - If your capital losses exceed your capital gains, the excess can be deducted on your tax return and
used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are
married and filing separately.
- If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry
over the unused part to the next year and treat it as if you incurred it in that next year.
Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred
to line 13 of Form 1040.
Fair Housing Administration (FHA) ANSW✅✅government agency that offers mortgage insurance
to certified lenders. FHA loans service low to medium income borrowers.
The federal Fair Housing Act prohibits discrimination because of race, color, religion, sex, handicap
(disability), familial status, or national origin in the sale, rental, or advertising of dwellings, in the
provision of brokerage services, or in the availability of residential real estate-related transactions.
Equal Credit Law ANSW✅✅The federal Equal Credit Opportunity Act (ECOA) is administered by
the Consumer Financial Protection Bureau (CFPB). This law was enacted in 1974 and makes it
unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit
transaction, on the basis of race, color, religion, national origin, sex, marital status, or age (provided
the applicant has the capacity to contract); to the fact that all or part of the applicant's income
derives from a public assistance program; or to the fact that the applicant has in good faith exercised
any right under the Consumer Credit Protection Act.
If a financial institution fails to comply with the Equal Credit Opportunity Act's Regulation B they can
be subject to civil liability for actual and punitive damages in individual or class actions. Liability for
punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1%
of the creditor's net worth in class actions
The federal Real Estate Settlement Procedures Act (RESPA) ANSW✅✅is also administered by the
CFPB, and was designed to ensure that buyers and sellers in residential real estate transactions
involving a new first mortgage loan have knowledge of all of the closing costs.
Market Value and Market Price ANSW✅✅The market value of a property is the amount the
property, in its current state, should sell for on the open market. The market price is the price that a
property actually sells for.
