Real Estate Exam Federal Law Practice Test 2025 Question Answers

1) The initial cost of an asset, increased by capital expenditures and reduced by depreciation expenses, from which gain or loss is measured is:

2) Cash or other unlike property included to equalize values in a Section 1031 exchange is called:

3) A Real Estate Investment Trust (REIT) must:

4) A tax deduction for business property that requires no cash outlay is:

5) A seller asks his broker about the race of a potential buyer. The broker:

6) Harold bought 20 acres for $125,000 and sold the land three years later for $230,000. On his income tax return, he reports:

7) To qualify as a Section 1031 exchange, the property must be:

8) Mr. and Mrs. Martin jointly bought a principal residence in 2004 for $325,000 and sold it in 2016 for $500,000. What portion of their $175,000 gain is subject to capital gains tax?

9) A homeowner, on his or her federal income tax return, may not deduct:

10) Indications of independent contractor status include:

11) Ellen owns a two-family house and lives in one side. She wants to advertise the other side as nonsmoking. Can she legally do so?

12) A homeowner, on their federal income tax return, may not deduct:

13) Which amendment to the Constitution provides support by banning racial discrimination?

14) Taxable gain on the sale of commercial real estate is calculated by:

15) When a salesperson’s agreement with a broker is to be an independent contractor, the broker:

16) In a Subchapter S corporation, the corporation itself:

17) Owners of improved rental property can generally deduct on their federal income tax returns in the year incurred:

18) Broker Barb is acting as a buyer’s agent for Joe. Joe asks whether any people of a certain race live in a specific neighborhood. How should Barb respond?

19) A broker has contacted owners in a certain subdivision and advised them that several members of a particular race have bought homes in the area. The broker has offered to list properties at a reduced rate and encouraged the owners to sell quickly. This is:

20) Cash or other unlike property included to equalize values in a Section 1031 exchange is called:

21) The federal income tax exemption on the gain from the sale of a personal residence held long enough by a married couple is up to:

22) Court action may be taken by an individual under the Fair Housing Act:

23) Depreciation claimed for income tax purposes:

24) Sullivan wants to rent an apartment but is confined to a wheelchair. At Sullivan’s request, the landlord must:

25) The two most important income tax deductions for homeowners are:

26) The 1968 Fair Housing Act, as amended, prohibits housing discrimination on the basis of:

27) The two most important income tax deductions for homeowners are:

28) Instead of selling business or investment property and paying a tax on the gain, one may prefer:

29) The federal income tax exemption on the gain from the sale of a personal residence held long enough by a single individual is up to:

30) Broker Bob is showing houses to Joe Chen, who is of Chinese ancestry. Bob shows Joe houses in a neighborhood of predominantly Chinese-American residents because Bob thinks Joe would feel more at home there. This is:

31) The federal income tax exemption on the gain from the sale of a personal residence held long enough by a single individual is up to:

32) If a landlord refuses to rent to a minority prospective tenant with a poor credit record:

33) A Real Estate Investment Trust (REIT) must:

34) Federal income tax rates are generally:

35) A REIT is like:

36) Federal income tax rates are generally:

37) A tax deduction for business property that requires no cash outlay is:

38) Where the dominant population base of an area consists of minorities:

39) Federal income tax deductions for a principal residence include:

40) Federal income tax deductions for a principal residence include:

41) Under Internal Revenue Code Section 1031, tax on the profit of an exchange is:

42) The federal income tax exemption on the gain from the sale of a personal residence held long enough by a married couple is up to:

43) The Civil Rights Act of 1968 prohibits:

44) No federal fair housing laws are violated if a landlord refuses to rent to:

45) The initial cost of an asset, increased by capital expenditures and reduced by depreciation expenses, from which gain or loss is measured is:

46) In the purchase of a home, which is frequently tax-deductible?

47) The report of a sale to the IRS is normally made on Form 1099 by the:

48) “Familial status” refers to:

49) Double taxation is generally not avoided when using which form of ownership?

50) Which of the following is exempt from the federal Fair Housing Act of 1968?