7D VAN Taxation and Title
EXAM GUIDE 2025
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
Abstract and Opinion - DEFINITION: A historical record of the documents on a property
PLUS the written opinion of an attorney concerning the quality of the chain of title.
Abstract of Title - DEFINITION: A complete historical summary of all recorded documents
affecting the title of a property.
Accelerated Depreciation - DEFINITION: Any method of depreciation used for accounting
or income tax purposes that allows greater deductions in the earlier years of the life of an asset.
While the straight-line depreciation method spreads the cost evenly over the life of an asset, an
accelerated depreciation method allows the deduction of higher expenses in the first years after
purchase and lower expenses as the depreciated item ages.
EXAMPLE: A common method of accelerated depreciation is called the double declining balance
(DDB) method. This is where the depreciation expense doubles the straight line depreciation
expense of the first year. The same percentage is then applied to the non depreciated amount in
the subsequent years.
Acceptance - DEFINITION: Communication to an offeror that the recipient (offeree) finds
the terms and conditions of an offer acceptable. Acceptance turns an offer into a binding
contract.
EXAMPLE: Acceptance must be in the same manner as received: in writing for real estate sales.
Acknowledgment - DEFINITION: Written declaration by a person who signs a document
that he or she is actually who he or she claims to be. Acknowledgements are witnessed by a
notary public or other authorized official.
Actual Notice - DEFINITION: Knowledge gained from what one has seen, heard, read, or
observed.
,EXAMPLE: When a tenant notifies the landlord that a window is broken, the landlord has actual
notice of the broken window.
Adjusted Basis - DEFINITION: Original cost of a property (basis) + the cost of capital
improvements made, minus depreciation. The Internal Revenue Service uses adjusted basis to
determine gains upon which the seller must pay taxes.
EXAMPLE: A rental income property is purchased for $300,000. The following year there are
$75,000 of capital improvements. By the time you sell the property you have also taken $21,000
in depreciation for the real estate and $4,000 on the additions. You wind up paying $25,000 to
sell the property (real estate commissions and closing costs).The computation would look like
this:$300,000 (original cost)+ 75,000 (capital improvements)+ 25,000 (cost of sale)- 21,000
(depreciation taken for property)- 4,000 (depreciation taken for additions)= $375,000 (adjusted
basis)
Adjusted Gross Income - DEFINITION: An accounting term used for purposes of tax
calculations. Gross income minus adjustments to income.
EXAMPLE: In a six-plex with five units occupied at a market rent of $700 per month and one
vacant unit, the potential gross income (PGI) would be $50,400. The $50,400 comes from the
$3,500 per month in collected rents and the $700 a month in rent for the vacant unit multiplied
by 12. Subtract the $8,400 in estimated rent for the vacancy from the PGI to find the effective
gross income (EGI) of $42,000.
Administrator/Administratrix - DEFINITION: A person chosen by the court to be the legal
representative of a deceased person's estate in cases where the individual dies without a will or
without having named an executor.
Administrator's Deed - DEFINITION: A document transferring real estate from a deceased
person who did not identity an executor.
EXAMPLE: If a person dies without a will, the administrator's deed is used to convey title to
his/her property.
Adverse Possession - DEFINITION: A claim of title based on knowingly occupying a
property for an uninterrupted and continuous period of time without the owner's consent. The
time is set by state law.
EXAMPLE: Through adverse possession, a trespasser can gain ownership of just a few feet of
property or hundreds of acres. The trespasser needn't intend to take the land by adverse
possession. Sometimes it happens through an honest mistake—for example, a neighbor may
have relied upon a faulty property description in a deed when building a fence on your property.
,After Acquired Interest - DEFINITION: An interest the grantor acquires after title has
passed to a grantee.
EXAMPLE: For example: John signs, acknowledges, and records a deed of his late father's ranch
to Sam, even though John has not yet received title from his father's estate. When John gets the
title from his father's estate and records it, the after-acquired title goes automatically to Sam.
Alienation - DEFINITION: Transfer of ownership, title or interest in real property; either
voluntarily (sale, gift or lease) or involuntarily (foreclosure).
American Land Title Association (A.L.T.A.) - DEFINITION: An association of title companies
that created uniform title forms and policies, with standardized requirements and title
exceptions, enabling lenders to rely on the security and thus make out-of-state loans. A
standard A.L.T.A. owner's policy does not cover facts which a survey should show, parties in
possession, unrecorded mechanics' liens, or governmental limitations (zoning).
Bargain and Sale Deed - DEFINITION: A bargain and sale deed does not warrant against
any encumbrances. It does imply that the grantor holds title to the property. Since it does not
warrant good title from the grantor, the grantee could be in trouble if title defects appear at a
later date. Trustees, executors, and other appointed parties use a bargain and sale deed to
communicate that they have not created any defects in the title.
EXAMPLE: The executor of an estate transfers a property with a Bargain and Sale Deed since the
executor may not be aware of encumbrances affecting the property incurred by the deceased.
Basis - DEFINITION: Original cost of a property for tax purposes.
Bequest - DEFINITION: A gift of personal property under a will, as well as the property
itself.
Bill of Sale - DEFINITION: A written document by which one person transfers personal
property to another.
Boot - DEFINITION: Money or unlike property given to make up any difference in equity in
a 1031 tax deferred exchange. It is taxable to the recipient.
Capital Gain - DEFINITION: The difference between the adjusted basis of a property and
its net selling price
Certificate of Title - DEFINITION: A statement of opinion prepared by a title company,
licensed abstractor or attorney on the status of title to a parcel of real property, based on an
examination of public records.
, Chain of Title - DEFINITION: A historical "chain" linked from the first recorded title of a
property down through each subsequent conveyance.
Cloud on the Title - DEFINITION: Any claim or encumbrance which, if valid, affects the
title or interest that a present owner claims to have in the property.
EXAMPLE: A defect may adversely affect the marketability of a title, such as an unreleased lien.
Clouds may often be cleared up by a quit claim deed or a quiet title suit.
Codicil - DEFINITION: A written supplement or amendment to an existing will.
Commercial Assessed Valuation - DEFINITION: A percentage of actual value for non-
residential property used to compute property tax.
EXAMPLE: Commercial properties are assessed at 29% of actual value and residential properties
are assessed at 7.2% of actual value as of 2017.
Condition Precedent - DEFINITION: A condition that must be met prior to the transfer of
title.
Conservation Easement - DEFINITION: A voluntary legal agreement between a landowner
and a land trust or government agency that permanently limits uses of the land in order to
protect its conservation values. Landowners retain many of their rights, including the right to
own and use the land (for most purposes), sell it, and pass it on to their heirs.
EXAMPLE: Private property subject to a conservation easement remains in private ownership.
Many types of private land use, such as farming, ranching and timber harvesting, can continue
under the terms of a conservation easement, and owners can continue to live on the property.
The agreement may require the landowner to take certain actions to protect land and water
resources, such as fencing a stream to keep livestock out or harvesting trees in a certain way; or
to refrain from certain actions, such as developing or subdividing the land. Conservation
easements do not mean properties are automatically opened up to public access unless so
specified in an easement.
Conservation Zoning - DEFINITION: An overlay zoning that is in addition to the base
zoning and is intended to conserve one or more characteristics in a district.
EXAMPLE: A conservation zoning was attached to the historic neighborhood to protect the
architectural character of the area.
Consideration - DEFINITION: Anything of value that induces one to enter into a contract.
EXAM GUIDE 2025
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
Abstract and Opinion - DEFINITION: A historical record of the documents on a property
PLUS the written opinion of an attorney concerning the quality of the chain of title.
Abstract of Title - DEFINITION: A complete historical summary of all recorded documents
affecting the title of a property.
Accelerated Depreciation - DEFINITION: Any method of depreciation used for accounting
or income tax purposes that allows greater deductions in the earlier years of the life of an asset.
While the straight-line depreciation method spreads the cost evenly over the life of an asset, an
accelerated depreciation method allows the deduction of higher expenses in the first years after
purchase and lower expenses as the depreciated item ages.
EXAMPLE: A common method of accelerated depreciation is called the double declining balance
(DDB) method. This is where the depreciation expense doubles the straight line depreciation
expense of the first year. The same percentage is then applied to the non depreciated amount in
the subsequent years.
Acceptance - DEFINITION: Communication to an offeror that the recipient (offeree) finds
the terms and conditions of an offer acceptable. Acceptance turns an offer into a binding
contract.
EXAMPLE: Acceptance must be in the same manner as received: in writing for real estate sales.
Acknowledgment - DEFINITION: Written declaration by a person who signs a document
that he or she is actually who he or she claims to be. Acknowledgements are witnessed by a
notary public or other authorized official.
Actual Notice - DEFINITION: Knowledge gained from what one has seen, heard, read, or
observed.
,EXAMPLE: When a tenant notifies the landlord that a window is broken, the landlord has actual
notice of the broken window.
Adjusted Basis - DEFINITION: Original cost of a property (basis) + the cost of capital
improvements made, minus depreciation. The Internal Revenue Service uses adjusted basis to
determine gains upon which the seller must pay taxes.
EXAMPLE: A rental income property is purchased for $300,000. The following year there are
$75,000 of capital improvements. By the time you sell the property you have also taken $21,000
in depreciation for the real estate and $4,000 on the additions. You wind up paying $25,000 to
sell the property (real estate commissions and closing costs).The computation would look like
this:$300,000 (original cost)+ 75,000 (capital improvements)+ 25,000 (cost of sale)- 21,000
(depreciation taken for property)- 4,000 (depreciation taken for additions)= $375,000 (adjusted
basis)
Adjusted Gross Income - DEFINITION: An accounting term used for purposes of tax
calculations. Gross income minus adjustments to income.
EXAMPLE: In a six-plex with five units occupied at a market rent of $700 per month and one
vacant unit, the potential gross income (PGI) would be $50,400. The $50,400 comes from the
$3,500 per month in collected rents and the $700 a month in rent for the vacant unit multiplied
by 12. Subtract the $8,400 in estimated rent for the vacancy from the PGI to find the effective
gross income (EGI) of $42,000.
Administrator/Administratrix - DEFINITION: A person chosen by the court to be the legal
representative of a deceased person's estate in cases where the individual dies without a will or
without having named an executor.
Administrator's Deed - DEFINITION: A document transferring real estate from a deceased
person who did not identity an executor.
EXAMPLE: If a person dies without a will, the administrator's deed is used to convey title to
his/her property.
Adverse Possession - DEFINITION: A claim of title based on knowingly occupying a
property for an uninterrupted and continuous period of time without the owner's consent. The
time is set by state law.
EXAMPLE: Through adverse possession, a trespasser can gain ownership of just a few feet of
property or hundreds of acres. The trespasser needn't intend to take the land by adverse
possession. Sometimes it happens through an honest mistake—for example, a neighbor may
have relied upon a faulty property description in a deed when building a fence on your property.
,After Acquired Interest - DEFINITION: An interest the grantor acquires after title has
passed to a grantee.
EXAMPLE: For example: John signs, acknowledges, and records a deed of his late father's ranch
to Sam, even though John has not yet received title from his father's estate. When John gets the
title from his father's estate and records it, the after-acquired title goes automatically to Sam.
Alienation - DEFINITION: Transfer of ownership, title or interest in real property; either
voluntarily (sale, gift or lease) or involuntarily (foreclosure).
American Land Title Association (A.L.T.A.) - DEFINITION: An association of title companies
that created uniform title forms and policies, with standardized requirements and title
exceptions, enabling lenders to rely on the security and thus make out-of-state loans. A
standard A.L.T.A. owner's policy does not cover facts which a survey should show, parties in
possession, unrecorded mechanics' liens, or governmental limitations (zoning).
Bargain and Sale Deed - DEFINITION: A bargain and sale deed does not warrant against
any encumbrances. It does imply that the grantor holds title to the property. Since it does not
warrant good title from the grantor, the grantee could be in trouble if title defects appear at a
later date. Trustees, executors, and other appointed parties use a bargain and sale deed to
communicate that they have not created any defects in the title.
EXAMPLE: The executor of an estate transfers a property with a Bargain and Sale Deed since the
executor may not be aware of encumbrances affecting the property incurred by the deceased.
Basis - DEFINITION: Original cost of a property for tax purposes.
Bequest - DEFINITION: A gift of personal property under a will, as well as the property
itself.
Bill of Sale - DEFINITION: A written document by which one person transfers personal
property to another.
Boot - DEFINITION: Money or unlike property given to make up any difference in equity in
a 1031 tax deferred exchange. It is taxable to the recipient.
Capital Gain - DEFINITION: The difference between the adjusted basis of a property and
its net selling price
Certificate of Title - DEFINITION: A statement of opinion prepared by a title company,
licensed abstractor or attorney on the status of title to a parcel of real property, based on an
examination of public records.
, Chain of Title - DEFINITION: A historical "chain" linked from the first recorded title of a
property down through each subsequent conveyance.
Cloud on the Title - DEFINITION: Any claim or encumbrance which, if valid, affects the
title or interest that a present owner claims to have in the property.
EXAMPLE: A defect may adversely affect the marketability of a title, such as an unreleased lien.
Clouds may often be cleared up by a quit claim deed or a quiet title suit.
Codicil - DEFINITION: A written supplement or amendment to an existing will.
Commercial Assessed Valuation - DEFINITION: A percentage of actual value for non-
residential property used to compute property tax.
EXAMPLE: Commercial properties are assessed at 29% of actual value and residential properties
are assessed at 7.2% of actual value as of 2017.
Condition Precedent - DEFINITION: A condition that must be met prior to the transfer of
title.
Conservation Easement - DEFINITION: A voluntary legal agreement between a landowner
and a land trust or government agency that permanently limits uses of the land in order to
protect its conservation values. Landowners retain many of their rights, including the right to
own and use the land (for most purposes), sell it, and pass it on to their heirs.
EXAMPLE: Private property subject to a conservation easement remains in private ownership.
Many types of private land use, such as farming, ranching and timber harvesting, can continue
under the terms of a conservation easement, and owners can continue to live on the property.
The agreement may require the landowner to take certain actions to protect land and water
resources, such as fencing a stream to keep livestock out or harvesting trees in a certain way; or
to refrain from certain actions, such as developing or subdividing the land. Conservation
easements do not mean properties are automatically opened up to public access unless so
specified in an easement.
Conservation Zoning - DEFINITION: An overlay zoning that is in addition to the base
zoning and is intended to conserve one or more characteristics in a district.
EXAMPLE: A conservation zoning was attached to the historic neighborhood to protect the
architectural character of the area.
Consideration - DEFINITION: Anything of value that induces one to enter into a contract.
