Practice Test Geeks(REA) Real Estate Analyst Certification Practice Test
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Real Estate Taxation & Accounting Flashcards

7 cards from real REA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Under MACRS, nonresidential (commercial) real property is depreciated over:

    Answer: 39 years using straight-line depreciation

    Under MACRS, nonresidential real property is depreciated over 39 years using the straight-line method and the mid-month convention.

  2. A cost segregation study benefits a real estate investor primarily by:

    Answer: Reclassifying building components into shorter depreciable lives to accelerate deductions

    Cost segregation studies identify personal property and land improvement components qualifying for 5-, 7-, or 15-year depreciation instead of 27.5 or 39 years, accelerating the time value of tax deductions.

  3. Unrecaptured Section 1250 gain on the sale of depreciable real property is subject to a maximum federal tax rate of:

    Answer: 25%

    Unrecaptured Section 1250 gain—representing previously taken straight-line depreciation on real property—is taxed at a maximum rate of 25%, which falls between regular long-term capital gains rates and ordinary income rates.

  4. Land is excluded from depreciation deductions primarily because:

    Answer: Land does not have a determinable useful life and is assumed to last indefinitely

    Land cannot be depreciated because it is not subject to wear, exhaustion, or obsolescence; a determinable useful life is a prerequisite for depreciation deductions under tax law.

  5. Under the Tax Cuts and Jobs Act of 2017, the first-year bonus depreciation percentage for qualifying property placed in service after September 27, 2017 was set at:

    Answer: 100%

    The TCJA increased bonus depreciation to 100% for qualified property placed in service after September 27, 2017, before the phased reduction began in 2023.

  6. When computing Net Operating Income (NOI) versus taxable income, depreciation is properly treated as:

    Answer: A non-cash deduction reducing taxable income but excluded from the NOI calculation

    Depreciation is a non-cash deduction that reduces taxable income but is not subtracted when computing NOI; analysts compute NOI before depreciation and then reconcile to before-tax cash flow separately.

  7. Qualified Improvement Property (QIP) placed in service after December 31, 2017 has a MACRS recovery period of:

    Answer: 15 years, making it eligible for bonus depreciation after the CARES Act correction

    The CARES Act in 2020 corrected a TCJA drafting error and assigned QIP a 15-year MACRS recovery period, qualifying it for bonus depreciation.