Florida Real Estate Practice Exam

Luke recently moved from a condominium to a cooperative. With a cooperative, his share of mortgage interest and real estate taxes will be ______.

1. Considered as capital gains

2. Deductible on his personal income tax returns

3. Fully refundable to him

4. Not deductible on his personal income tax returns

The correct answer is: Deductible on his personal income tax returns

With a cooperative, his share of mortgage interest and real estate taxes will be deductible on his personal income tax returns. This is because in a cooperative, the shareholders own shares in the building as a whole, rather than owning their individual units. Therefore, their share of expenses, such as mortgage interest and real estate taxes, are considered deductible expenses on their personal income tax returns. The other options are incorrect because A: Capital gains are generally associated with the sale of an asset, not with mortgage interest and real estate taxes. C: Refundable expenses are those that can be reimbursed or returned to the individual, but mortgage interest and real estate taxes are not typically refundable. D: Again, mortgage interest and real estate taxes are deductible expenses for cooperative shareholders.