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Calculation of Long-Term Real Capital Gain on Housing
The capital gain on a housing investment held over multiple years is determined by the total change in the property's inflation-adjusted market price across the entire ownership period.
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Calculation of Long-Term Real Capital Gain on Housing
An individual purchases a house for $400,000. One year later, they sell the same house for $440,000. Assuming there are no other costs or income associated with the property, what is the capital gain on this housing investment?
Isolating Capital Gain in a Real Estate Investment
Analyzing Components of Housing Return
An investor buys a residential property for $500,000. Over the next year, the market value of the property increases to $525,000, and the investor collects $20,000 in rental income. The capital gain on this housing asset for the year is calculated by adding the $25,000 increase in market value to the $20,000 in rental income.
Match each housing investment scenario to its correct capital gain percentage for the holding period.
An investor sold a house for $525,000, realizing a capital gain of 5% for the one-year holding period. The original purchase price of the house was $______. (Enter a number only, without commas or currency symbols).
Evaluating Housing Investment Strategies
A real estate investor wants to calculate the capital gain percentage on a property they owned for one year. Arrange the following steps into the correct logical sequence to perform this calculation.
An investor is comparing the performance of two properties they owned for one year.
- Property X was purchased for $200,000 and sold for $220,000. It also generated $15,000 in rental income.
- Property Y was purchased for $500,000 and sold for $540,000. It also generated $10,000 in rental income.
Based solely on the capital gain component of return, which property performed better as a percentage of its initial price?
An individual buys a house for $250,000. One year later, the market value of the house has decreased to $240,000. During that year, the owner also received $15,000 in rental payments. Which of the following statements correctly identifies and calculates the capital gain (or loss) for this period?
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Evaluating a Long-Term Housing Investment
An individual purchased a house in Year 1 for $250,000 and sold it ten years later for $400,000. The general price index was 150 in Year 1 and 225 ten years later. What was the real capital gain on this housing investment, expressed in Year 1 dollars?
Calculating Real Capital Gain on a Property
An investor bought a house for $300,000 and sold it 15 years later for $450,000. During this period, the overall price level in the economy increased by 50%. The investor correctly concluded that they realized a real capital gain on the property.