Personal Finance Study Set 5

In a direct real estate investment,the investor holds legal title to the property.

With an indirect real estate investment,the investors appoint a trustee to hold legal title on behalf of all the investors in the group.

Limited partnerships and syndicates are examples of direct real estate investment.

People primarily buy a vacation home for tax reasons according to one certified public accountant.

A real estate syndicate provides professional management and unlimited liability for its members.

Land purchased with the intent of subdividing it is speculative,because it involves many risks.

Indirect real estate investments include investing in real estate syndicates,REITs,and participation certificates.

Ginnie Maes are backed by the full faith and credit of the Federal Government.

A passive activity is a business or trade in which you do not materially participate.

Passive loss is the total amount of losses from a passive activity minus the total income from the passive activity.

Many investors buy land with the intention of subdividing it.

Real estate investment trusts are government-owned real estate companies.

A syndicate is a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital.

Real Estate Investment Trusts are required by federal law to have at least 500 shareholders.

Real Estate Investment Trusts must distribute at least 90 percent of their taxable annual earnings to shareholders.

The limited partnership is formed by a limited partner,who has unlimited liability for its debts.

A REIT is similar to a mutual fund or an investment company,and it trades on stock exchanges or over-the-counter.

There are three types of REITs: equity REITs,mortgage REITs,and hybrid REITs.

Federal law requires that no more than half the shares in a REIT may be owned by 15 or fewer people.

A participation certificate is an equity investment in a pool of mortgages or student loans that have been purchased by one of several government agencies.