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SINGLE FAMILY HOUSING: PRICING, INVESTMENTS, AND TAX INVESTMENTS OBJECTIVES Analysis of Investment Property Tax and Depreciation Effects Appraisals Income.

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Presentation on theme: "SINGLE FAMILY HOUSING: PRICING, INVESTMENTS, AND TAX INVESTMENTS OBJECTIVES Analysis of Investment Property Tax and Depreciation Effects Appraisals Income."— Presentation transcript:

1 SINGLE FAMILY HOUSING: PRICING, INVESTMENTS, AND TAX INVESTMENTS OBJECTIVES Analysis of Investment Property Tax and Depreciation Effects Appraisals Income Approach Cost Approach Market Approach (Sales Comparison)

2 Demand - Single Family House Prices Population Growth Household formations Employment Household Income Interest Rates Federal Income Tax Policy Cost of Renting

3 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 Tax Treatment of Personal Residence

4 Advantages of Renting Flexibility Lack of down payment Credit quality of resident Risks of ownership Maintenance “Bubbles” in house price

5 Pricing Property: Appraisals Market or sales comparison approach Cost approach Income approach

6 Sales Comparison Approach Adjustments for: – Time – Location – View – Design appeal – Quality of construction – Age

7 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

8 Cost Approach Value of land plus estimate of improvements Depreciation – Physical depreciation – Functional obsolescence – External obsolescence – Curable v.s. incurable

9 Income Approach Gross rent multiplier Difficult to use for single family residential properties


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