Chapter 7 Powerpoint Presentation

  • Published on
    09-May-2015

  • View
    203

  • Download
    2

Transcript

  • 1.CHAPTER SEVEN SINGLE FAMILY HOUSING: PRICING, INVESTMENTS, ANDTAX INVESTMENTS

2. Demand - Single Family House Prices Population Growth Household formations Employment Household Income Interest Rates Federal Income Tax Policy Cost of Renting 3. Tax Treatment ofPersonal Residence Interest deductions Primary residence Second residence Maximum interest deductions Acquisition debt- $1,000,000 Home equity debt- $100,000 Points on mortgage loans Real Estate taxes Capital gain exclusion 4. Tax Treatment ofSecond Residence Interest Points- amortized No capital gain exclusion Vacation homes- special rules 5. Advantages of Renting Flexibility Lack of down payment Credit quality of resident Risks of ownership Maintenance Bubbles in house price 6. Pricing Property: Appraisals Market or sales comparison approach Cost approach Income approach 7. Sales Comparison Approach Adjustments for Time Location View Design appeal Quality of construction Age 8. Sales Comparison Approach Continued Adjustments continued: Condition Size Quality of interior Functional utility Type and condition of systems; i.e.,HVAC Sale or financing concessions 9. Cost Approach Value of land plus estimate of improvements Depreciation Physical depreciation Functional obsolescence External obsolescence Curable vs. incurable 10. Income Approach Gross rent multiplier Difficult to use for single family residential properties