1. Usually, you can deduct the entire part of your payment that
is for mortgage interest, if you itemize your deductions on Schedule A (Form
1040). However, your deduction may be limited if
A.
Your total mortgage balance is more than $1 million ($500,000 if married filing
separately).
B. You
took out a mortgage for reasons other than to buy, build, or improve your home.
C.
You took out a mortgage to buy, build, or improve your home.
D.
Either A or B above.
2. If you qualify as a first-time homebuyer, you may be able to
claim a one-time credit of
A. 10%
of the purchase price of your home.
B. Up
to $7,500.
C.
Up to $2,000.
D.
The smaller of A or B above.
3. If you took out a mortgage to finance the purchase of your
home, you probably have to make monthly house payments. Your house payment may
include several costs of owning a home. The only cost you can deduct
A. Are
real estate taxes actually paid to the taxing authority.
B. Is
interest that qualifies as home mortgage interest.
C.
Are mortgage insurance premiums.
D.
All of the above.
4. If you are a member of the uniformed services and receive a
housing allowance that is not taxable, you still can deduct your real estate
taxes and your home mortgage interest. However, you have to reduce your
deductions by your nontaxable allowance.
True
False
5. You may be able to deduct $500 ($1,000, if married filing
jointly), for real estate taxes you paid even if you do not itemize deductions
on your income tax return.
True
False
6. You may be able to claim a one-time tax credit if you are a
first-time homebuyer. You (and your spouse if married) are considered a
first-time homebuyer if you purchased your main home in the United States after
April 9, 2008, and before July 1, 2009, and
A. You
did not own any other main home during the 3-year period ending on the date of
purchase.
B. You
did not own any other main home during the 3-year period ending on the date you
first constructed your home.
C.
Both A and B above.
D.
You did not own any other main home during the 5-year period ending on the date
of purchase.
7. The mortgage interest credit in intended to help lower-income
individuals afford home ownership. If you qualify, you can claim the credit each
year for part of the home mortgage interest you pay. The following is a true
state regarding the credit.
A. A
limit based on the credit rate and a limit based on your tax may apply to your
credit.
B. If
the certificate credit rate is higher than 20%, the credit you are allowed
cannot be more than $2,000.
C.
Your credit generally cannot be more than your regular tax liability on Form
1040, line 44, plus any alternative minimum tax on Form 1040, line 45, minus
certain other credits.
D.
All of the above.
8. Reé Salome bought a home this year. His mortgage loan is
$230,000. The certificate indebtedness amount on his MCC is $184,000. He paid
$13,800 interest this year. Reé figures the interest to enter on Form 8396, line
1 to be
A.
$6,000.
B.
$7,500.
C.
$11,040.
D.
$13,800.
9. Generally, the first-time homebuyer credit operates much line
an interest free loan and must be repaid over a 15-year period. You can claim
the credit if
A. Your
modified adjusted gross income is $95,000 or more ($170,000 or more if married
filing jointly).
B. Your
home financing comes from tax-exempt mortgage revenue bonds.
C.
You acquired your home from a related person or by gift or inheritance.
D.
None of the above.
10. The cost of your home, whether you purchased it or
constructed it, is the amount you paid for it, including any debt you assumed.
You can include in your basis the settlement fees and closing costs you paid for
buying the home. You can include the following in the original basis of your
home.
A.
Owner's title insurance.
B. Any
amount the seller owes that you agree to pay, such as back taxes or interest,
recording or mortgage fees, cost for improvements or repairs, and sales
commissions.
C.
Legal fees (including fees for the title search and preparation of the sales
contract and deed), recording fees, surveys and transfer taxes.
D. Any
of the above.
11. You cannot include or add the following settlement and
closing cost to your basis.
A.
Abstract fees (abstract of title fees).
B.
Charges for installing utility services.
C.
Charges connected with getting or refinancing a mortgage loan, such as loan
assumption fees, costs of a credit report, and fee for an appraisal required by
a lender.
D.
Legal charges (including fees for the title search and preparation of the sales
contract and deed).
12. While you own your home, various events may take place
that can change the original basis of your home. These events can increase or
decrease your original basis. The result is called adjusted basis. An
improvement materially adds to the value of your home, considerably prolongs its
useful life or adapts it to new uses and you
A. Can deduct these costs.
B. Must subtract the cost of any improvements from the basis of your home.
C. Must add the cost of any improvements to the basis of your home.
D. None of the above.
13. You can exclude from gross income any discharges of
qualified principal residence indebtedness made after 2006 and before 2012.
True
False
14. An itemized charge for services to specific property or
people is not a tax, even if the charge is paid to the taxing authority. You
cannot deduct the charge as a real estate tax if it is
A. A unit fee for the delivery of a service (such as a $5 fee charged for every
1,000 gallons of water you use).
B. A periodic charge for a residential service (such as a $20 per month or $240
annual fee charged for trash collection).
C. A flat fee charged for a single service provided by your local government
(such as a $30 charge for mowing your lawn because it had grown higher than
permitted under a local ordinance).
D.
Any of the above.
15. Contact the appropriate government agency about getting an
MCC before you get a mortgage and buy your home. Contact your nearest IRS office
for information about the availability of MCCs in your area.
True
False
16. You may be eligible for the MCC credit if you were issued a
mortgage credit certificate (MCC) from your state or local government.
Generally, an MCC is issued only in connection with a new mortgage for the
purchase of a main home. To claim the credit
A. Complete Form 8396 and attach it to your Form 1040.
B. Include the credit in your total for Form 1040, line 53.
C. Be sure to check box a on Form 1040, line 53.
D. All of the above.
17. If you purchased a home after 1990 using an MCC, and you sell
that home within 9 years, you may have to recapture all or part of the benefit
you received from the MCC program.
True
False
18. If you pay any part of the seller's share of the real
estate taxes (the taxes up to the date of sale), and the seller did not
reimburse you, you
A. Add those taxes to the basis in the home.
B. Cannot deduct them as taxes paid.
C. Both A and B above.
D. Can deduct them as taxes paid.
19. If a public utility gives you (directly or indirectly) a
subsidiary for the purchase or installation of an energy conservation measure
for your home,
A. Do not include
the value of that subsidy in your income.
B. You must reduce
the basis of your home by that value.
C. Both A and B
above.
D. You must
increase the basis of your home by that amount.
20. Keeping full and accurate records is vital to properly report
your income and expenses, to support your deductions and credits, and to know
the basis or adjusted basis of your home. The following is a true statement
regarding keeping records.
A. How you keep
records is up to you, but they must be clear and accurate and must be available
to the IRS.
B. You must keep
your records for as long as they are important for meeting any provision of the
federal tax law.
C. Keep records
that support an item of income, a deduction, or a credit appearing on a return
until the period of limitations for the return runs out.
D. All of the
above.