CNBC Quiz: Real Estate Investing 2011

Quiz: Real Estate Investing 2011

Private property is a concept near and dear to America, but It was not specifically addressed in the Constitution. It was left to the Bill of Rights, and the Fourth Amendment, which prevents the government from improperly taking property without a valid warrant based on probable cause (good reason).

Yet, it wasn't until the 20th century that home ownership became affordable and common.. The original income tax law of 1913 allowed the deduction of interest on mortgages (and just about everything else.) The game changer, however, was the GI Bill of 1944, which provided low cost loans to veterans to buy homes.

The life saver came later. Though the tax reform bills of 1986 and 1987 eliminated the deductibility of most interest, The mortgage one, however, survived, even if a cap was imposed for the first time.

The deduction and other government policies in recent decades made home ownership so affordable that at one point seven out of ten Americans owned a house. So how much do you know about home ownership and real estate. Take our quiz.

Posted 15 March 2011

What is the maximum dollar amount of profit (capital gains) you can exclude from taxation on the sale of a primary residence?

1. $250,000
2. $400,000
3. $450,000
4. $500,000

$500,000

Source: IRS

What percentage of existing homes are worth more than $1 million?

1. 1.0%
2. 1.5%
3. 2.0%
4. 2.5%

As of January 2011, it was 1.5 percent.

Source: National Association of Realtors, NAR

Which European country has the lowest percentage of home ownership?

1. France
2. Germany
3. Spain
4. UK

Germany at 39%; the UK, at 68%, has the highest percentage

Source: german-way.com

Which state has the highest foreclosure rate?

1. Arizona
2. California
3. Florida
4. Nevada

Nevada--One in every 93 households was involved in a foreclosure filing, defined as a default notice, auction sale notice or bank repossession.

Source: Reality Trak

How many second (vacation) homes are there in the U.S?

1. 6 million
2. 8 million
3. 10 million
4. 12 million

To be exact, 7.9 million, as of 2009.

Source: NAR/Census Bureau

Which metro area has the highest median price for a single family house?

1. Boston
2. Honolulu
3. Silicon Valley (San Jose, Santa Clara, Sunnyvale)
4. San Francisco

Honolulu at $598.200, as of the fourth quarter of 2010. Silicon Valley was second.

Source: NAR

California's legendary proposition 13 limited normal annual property tax increases to what amount?

1. 1.0%
2. 1.5%
3. 2.0%
4. 2.5%

Two percent, as long as the house does not change hands.

Source: californiataxdata.com

Which state has the highest median property taxes on owner-occupied homes.

1. California
2. Connecticut
3. Hawaii
4. New Jersey

New Jersey--$6,579. Louisiana has the lowest $243.

Source: Tax Foundation

Adding which item brings the highest return on investment in terms of selling your house?

1. Bathroom (upscale)
2. Deck (wooden)
3. Garage
4. Second story

A deck usually nets 81.8% of its original cost.

Source: home-equity.interest.com

Who was the first president to live in the White House?

1. George Washington
2. John Adams
3. Thomas Jefferson
4. James Madison

The building was almost complete in 1800 when Adams moved in. Construction began in 1792 and continued through Washington's two terms.

Source: whitehouse.gov

Your score:

• If you answered 9-10 of the questions correctly, you are definitely landlord material.
• If you answered 6-8 correctly, you're probably a homeowner.
• If you answered 5 or less correctly, stick with renting.