An income property is also called an investment property, which is a piece of developed commercial or residential real estate that is used by a third party tenant who makes rental or lease payments for the use of it. Income property can be a good source of income for an individual or business. It can include single- or multi-family residential or commercial properties. Sometimes people co-own income properties together, and receive a proportionate share of the proceeds according to the amount of the start-up capital they paid in. Continue reading...
IRS Link to Publication — Found Here Owning multiple properties and receiving rent or lease income from those which are not personally used is a common way to increase wealth. Some individuals also own a vacation home which they use some of the time and rent out the rest of the year. Both of these sources of income addressed in Publication 527. Publication 527 describes how to report income from residential property, as well as how to depreciate it, what forms are needed for different situations, and categorizes different types of arrangements where individuals might own or rent only part of a property or only for certain times of the year, as well as not-for-profit rental. Continue reading...
Most people think of an abandoned car or even a house when abandoned property is mentioned, but it also applies to investment accounts. If physical property such as a car is left for a long enough time in a public space or privately owned space such as a storage building, the property can be deemed abandoned and the person who discovers it can become the new owner. Through a process called escheatment, investment accounts, savings accounts, bank CDs, and employee 401(k) accounts can all become assets of the state if they are determined to be abandoned. Continue reading...
Investment property is real estate that an individual or entity owns without the intention to directly use it, but rather to benefit from its ownership. Investment property is not directly used or inhabited by the owner. Its purpose is to provide income through rental or lease, or to be sold at a later time after the property has appreciated. Sometimes this involved building upon the property, or otherwise renovating or improving it. The property might be commercial or residential, with multiple tenants or a single one. Continue reading...
Residual income is a stream of income that persists from one work project or investment. Residual income is also known as passive income, and is income which comes from an investment of money or work in the past, where minimal or no additional money, work, or maintenance is required. Residual income could come from investments such income-generating real estate, or work completed such as a published book or acting in a commercial. Continue reading...
A non-current asset is an asset on the balance sheet that is not expected to convert into unrestricted cash within a year’s time. Non-current assets may include such things as intellectual property and production/operations equipment - meaning they likely do not have a need to convert to cash. From a balance sheet standpoint, non-current assets are capitalized rather than expensed - meaning the company can allocate the asset’s cost of the asset over the number of years for which the asset will be used, instead of allocating it all in the year it was purchased. Continue reading...
IIE is deductible from taxes, and is usually used to deduct the interest paid on a margin loan used to buy taxable securities, when there is a gain to offset. Investment interest expense is the term for interest which has been paid in order to hold an investment position. It comes into play when filing taxes. An individual can list interest expenses on a Form 1040. The most common place to incur an interest expense when investing is through the use of margin in an investment account. Continue reading...
Assessed value is used to determine the property taxes due on real estate. Assessed value is normally lower than the appraised value of a residential property, because it is not looking as much at the value of the home, but rather the value of the property, for property tax assessment. While the assessed value does have to do with the market value of real estate, most calculations only use average home prices the area, found in local real estate listings, as part of the valuation. The “ask” prices are going to be higher than the prices at which they’ll sell. Continue reading...
Real estate can be purchased in a form you can see, touch, and pay maintenance costs on, or it can be purchased indirectly through the use of REITs and other securities tied to the real estate industry. Real estate investments fall into a wide spectrum of subsets. You can invest in residential property, commercial property, development projects, raw land, etc. Within the residential sphere are multi-family residential complexes, rental houses, foreclosure flips, and vacation rentals with property management. Continue reading...
Tangible assets are the property of a company that are tangible and can be quickly liquidated. This includes current-period accounts receivable and money in checking, savings, and money-market accounts. Buildings, land, equipment and inventory are all tangible assets as well. Tangible assets are an important part of a company’s book value. For most valuations, intangible assets such as patents, other intellectual property, and goodwill are not included. Continue reading...
Income is a stream, series, or lump sum of cash or cash equivalents that is paid to an individual or entity based on work performed, goods sold, ownership rights, or by being a creditor to whom interest is paid. It is received when a net result is positive, and is sometimes referred to as the “bottom line.” Income can be viewed from a itemized, current perspective or as a balance sheet item for an entire accounting period, such as a year. It also might be discussed as a gross (pre-tax) or net (post-tax) amount. Continue reading...
Earnings Before Interest, Taxes, and Depreciation (EBITD) is one method of viewing the earnings of a company with some of the typical expenses added back into it. It is not to be confused with its close cousin EBITDA, which also adds amortization back in. Amortization is essentially the same thing as depreciation, but amortization applies to intangibles such as debt principal amounts and intellectual property. Continue reading...
Operating income is essentially another term for EBIT, or earnings before interest and taxes. It is a company’s profits (revenue - COGS) minus operating expenses and depreciation. Operating income is different from net income in that it does not account for expenses such as taxes, interest from debt payments, or outside business activities. It offers a pure look at how a company effectively generates cash from internal operations. Continue reading...
Income risk is the chance that an investment which is used for income will fluctuate in an unfavorable way if the interest rate environment or market conditions change. Some mutual funds and ETFs are branded as income funds when they use lots of corporate bonds that generate regular income payments, but they are often sensitive to interest rate changes. The Federal Reserve Board and the market can affect changes in the interest rate environment as times goes on. Continue reading...
An Assessor is a government employee who finds the value of properties and other assets for tax and insurance purposes. The assessor’s office is responsible for coming up with the assessed value of real estate property in a municipality, for the purpose of assessing property taxes. Assessors may have other roles, but this is the main one. Considering that assessors have to determine a value of every piece of real property in their district, it can certainly be an overwhelming task. Continue reading...
An Abandonment Clause primarily refers to maritime insurance contracts in which a lost vessel can be replaced without the expectation of recovery or salvage, or the terms by which a construction contract or lease agreement can be dissolved. This is not to be confused with an Abandonment Option contract between a financial advisor and his or her client. It can also refer to a frequently used clause in construction law, in which the contractors define an abandoned project and give their counter-parties the right to move on and find another contractor to finish the job. Continue reading...
Net income is the amount of earnings left over once expenses have been deducted from sales. In short, it is the net amount of profit or loss. It is calculated by taking total earnings in a period (such as a quarter), and deducting all elements of the cost of doing business (labor, depreciation, fixed expenses, overhead, etc…) Net income is ultimately a measure of a company’s profitability, and its calculation should be scrutinized closely to ensure all expenses are being accounted for accurately. Continue reading...
IRS Link to W2-G Form — Found Here IRS Link to Form 1040 — Found Here Winnings from gambling activity must be reported as income, and they will be subject to different kinds of taxes depending on how they were won and the amount. If you win over a certain amount through a lottery, raffle, horse track, keno game, slot machine, poker tournament, or other form of gambling, it will all be taxed at a 25% rate and will have to file form W2-G. Lesser winnings will still need to be reported as income. If an individual wins over $600, less the amount of the wager, and it is over 300 times the amount of the bet, they must file a W2-G on their taxes. Continue reading...
An income statement is a business’s financial statement that gives the income results from operations and non-operations activity. It is also called a profit and loss statement or a statement of operations. It is one of the major financial statements in the world of corporate accounting. The others are the balance sheet, the statement of cash flows, and the statement of shareholder’s equity. The income statement will included revenues and gains from investments and “secondary operations”, but it will not include cash flows in or out which may stem from other accounting periods. Continue reading...
Income tax is paid to the government based on the amount of income earned. There are federal income taxes, and some states have their own income taxes, too. As an employee for a company, income taxes will be withheld from paychecks using the company’s best estimation of your annual earnings. At the end of the year it may turn out that they withheld too much, and the government may give you a tax refund for what was overpaid. Continue reading...