Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

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Prepare for the CAPS Exam with a comprehensive study of Module 2. Utilize our practice resources filled with flashcards, multiple choice questions, and thorough explanations to ensure your success!

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What determines taxable gain or loss in property sales?

  1. Difference between sales price and original basis

  2. Difference between net sale price and adjusted basis

  3. Cost of improvement minus original basis

  4. Market value appraisal minus purchase price

The correct answer is: Difference between net sale price and adjusted basis

The determination of taxable gain or loss in property sales hinges on the comparison between the sale price and the adjusted basis of the property. The adjusted basis reflects the original cost of the property, plus any improvements made, minus any depreciation taken. Thus, when the net sale price—meaning the amount received from the sale after subtracting selling expenses—is compared to this adjusted basis, it reveals whether there is a gain or loss for tax purposes. If the net sale price exceeds the adjusted basis, a taxable gain occurs; if it is lower, a loss is recognized. Recognizing this structure is essential for accurately assessing tax liabilities from property transactions.

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