Comprehensive Real Estate Seminar for Real Estate Appraisers

June 27, 2015 | Best Western Hotel La Corona Hotel

Second Quiz

Name: __________________________________________________________________ Score: _________________

Multiple Choice: Encircle the best possible answer from the given selections.

I. Fundamentals of Real Estate Principles and Practices

1. Value is present the present worth of benefits, both income and intangible amenities
a. Principle of Change c. Principle of Anticipation
b. Principle of Competition d. Principle of Conformity

2. Real estate values are constantly changed by social, economic, and political forces in society
a. Principle of Change c. Principle of Anticipation
b. Principle of Competition d. Principle of Conformity

3. Market demand generates profits and profits generate competition; competition stabilizes profit
a. Principle of Change c. Principle of Anticipation
b. Principle of Competition d. Principle of Conformity

4. Maximum Value results when properties in neighborhood are relatively similar in size, style, quality, use and/or type.
a. Principle of Change c. Principle of Anticipation
b. Principle of Competition d. Principle of Conformity

5. Both land and improvements must be appraised for the same use.
a. Principle of Consistent Use c. Principle of increasing and decreasing returns
b. Principle of Progression & Regression d. Principle of Surplus Productivity

6. Income and other benefits available from real estate may be increased by adding capital improvements only up to the
point of balance in the agents of production, beyond which the increase in value tends to be less than the increase in
costs.
a. Principle of Consistent Use c. Principle of increasing and decreasing returns
b. Principle of Progression & Regression d. Principle of Surplus Productivity

7. Lower-valued properties generally benefit from close proximity to many properties of higher value and higher valued
properties tend to suffer when placed in close proximity with lower valued properties
a. Principle of Consistent Use c. Principle of increasing and decreasing returns
b. Principle of Progression & Regression d. Principle of Surplus Productivity

8. ____________ refers to the purpose for which the property is principally or predominantly utilized by the person in the
passion thereof.
a. Commercial use c. Actual Use
b. Industrial Use d. Value in Use

9. Land devoted principally to the planting of trees, raising of crops, livestock and poultry, dairying, salt making, inland
fishing and similar aqua-cultural activities.
a. Horticultural Land c. Agricultural Land
b. Timber Land d. Residential Land

10. A value which is based upon definitions contained within applicable laws relating to the assessment, rating, and/or
taxation of property. It is the fair market value of the real property multiplied by the assessment level.
a. Remaining Value c. Depreciation Value
b. Assessment Value d. Remaining Economic Value

11. ____________ is the act or process of determining the value of a property or proportion thereof subject to tax,
including the discovery, listing, classification, and appraisal of properties.
a. Appraisal c. Consultancy
b. Brokerage d. Assessment

12. ___________ is the percentage applied to the fair market value to determine the taxable value of the property.
a. Real Property Rate c. Assessment Level
b. Assessment Percentage d. Tax Level

13. The price that is the final accepted bid at a public auction; may or may not include any fees or commissions.
a. List Price c. Bidding Cost
b. Contract Price d. Auction Price

14. A statement of the fundamental measurement principles of a valuation on a specific date.

a. Statement of Accounts c. Inspection Value
b. Valuation Report d. Basis of Value
15. These are permanent structures adhered to the land, usually used for habitation, commercial and industrial purposes
and for other various uses and not mere superimpositions on the land like a “barong barong” or temporary fixtures.
a. Warehouse c. Cottage
b. Buildings d. Skyscraper

16. In the context of asset valuation, this refers to the adjustment made to the cost of reproducing or replacing the asset to
reflect physical deterioration and functional and economic obsolescence in order to estimate the value of the asset in a
hypothetical exchange in the market when there is no direct sales evidence available
a. Inflation c. Reconciliation of values
b. Depreciation d. Flagging

17. ________________ is land set aside or devoted principally for the object of profit and is not classified as agricultural,
industrial, mineral, timber, or residential land.
a. Mineral Land c. Timber Land
b. Commercial Land d. Forest Land

18. A production-related concept, distinct from exchange. Once the good is completed or the service is rendered, its
_____ becomes a historic fact.
a. Value c. Cost
b. Amount Payable d. Price

19. Changes in competition or in the nature of surrounding land uses whereby a previously economic or worthwhile
building or use ceases to have the value it had under former circumstances. It is the loss in value due to factors outside
the subject property.
a. Functional Obsolescence c. External Obsolescence
b. Physical Depreciation d. None of the above

20. A circumstance where a seller is under compulsion to sell and/or a proper marketing period is not available. The price
obtainable under these circumstance will not meet the definition of Market Value.
a. Forced Sale c. Caprice Sale
b. Arms Length Transaction d. All of the Above

21. Absolute ownership subject to limitations imposed by the country; also known as a fee simple estate. An estate held
for perpetuity
a. Freehold c. Leasehold
b.Sublease d. Leased Fee

22. The value remaining after deducting depreciation from the replacement cost
a. Investment Value c. Book Value
b. Insurable Value d. Depreciated Value

23. A non-possessory interest in landed property conveying use, but not ownership, of a portion of that property.
a. Dominant Estate c. Servient Estate
b. Easement d. None of the above

24. This is the estimated period over which it is anticipate that a building or machinery may be profitably utilized.
a. Effective Age c. Economic Life
b. Useful Life d. Useful Age

25. It is a land devoted principally to industrial activity as capital investment and is not classified as agricultural,
commercial, timber, mineral or residential land.
a. Timber Land c. Industrial Land
b. Forest Land d. Agricultural Land

26. A loss in value within a structure due to changes in tastes, preference, technical innovations, or market standards. It
includes excess capital costs and excess operating costs.
a. Functional Obsolescence c. Physical Depreciation
b. Economic Obsolescence d. Easement

27. An intangible but marketable asset based on the probability that customers will continue to resort to the same
premises where the business is carried on under a particular name, or where good are sold or services provided under a
trade name, with continuing prospect of earning an acceptable profit being likely.
a. Charity c. Branding
b. Marketability d. Good Will

28. The most probable use of a property which is physically possible, appropriately justified, legally permissible, financially
feasible, and which results in the highest value of the property being valued.
a. Consistent Use c. Anticipation
b. Substitution d. Highest and Best Use

29. It is a land devoted to or cultivated for planting of vegetables, flowers and other ornamental plants.
a. Horticultural Land c. Mineral Land
b. Timber Land d. Agricultural Land
30. Lands in which minerals, metallic or non-metallic, exist in sufficient quantity or grade to justify the necessary
expenditures to extract and utilize such materials
a. Industrial Land c. Mineral Lands
b. Residential Land d. Forest Land

31. Lands used to produce crops or forage for livestock and which require the application of water other than that from
natural rainfall.
a. Mineral Lands c. Irrigated Land
b. Poultry Land d. Forest Land

32. Land specifically devoted to various fruit trees and plants.

a. Garden c. Backyard
b. Orchard d. Farm

33. The value that the basic recoverable materials of a physical property would have as junk if ti were completely broken
up or too badly deteriorated to serve its normal purpose; the value of an asset at the end of its physical life.
a. Book Value c. Scrap Value
b. Insurable Value d. Investment Value

34. The value corresponding to the remaining useful life of an asset, commonly used in regard to the machinery.
a. Investment Value c. Insurable Value
b. Taxable Value d. Remaining Value

35. Land principally devoted to habitation

a. Commercial Land c. Industrial Land
b. Residential Land d. Forest Land

36. The period of time over which the property, with typical maintenance, may reasonably be expected to perform the
function for which it was designed or intended.
a. Economic Life c. Effective Age
b. Construction period d. Useful Life

37. The following are considered as determinants of value, EXCEPT:

a. Demand c. Scarcity
b. Utility d. None of the Above

38. What are the forces that influence real estate values?
a. Demand, Utility, Scarcity, Transferability
b. Physical and Environmental, Economic, Government and Legal, Social
c. Immobility, Indestructibility, Non-homogeniety
d. Scarcity, Modification, Fixity, Area Preference

39. The value of the portions of the property that are physically destructible
a. Scrap Value c. Remaining Value
b.Investment Value d. Insurable Value

40. The regularly repeating sequence of economic downturns and upturns and associated changes in real estate market
transactions tied to market dynamics and changing macro-economic conditions.
a. Market Fluctuations c. Market Trends
b. Real Estate Circles d. Real Estate Cycles
II. National Taxation

41. It is a tax on all yearly profits arising from property, professions, trades, or offices, or as tax on a person’s income,
emoluments, profits, and the like.
a. Donor’s Tax c. Estate Tax
b. Value-Added Tax d. Income Tax

42. It is a tax on the right of a deceased person to transmit his estate to his lawful heirs or beneficiaries and certain
transfer by the decedent during his lifetime which are made by the law the equivalent testamentary dispositions.
a. Donor’s Tax c. Estate Tax
b. Value-Added Tax d. Income Tax

43. It is imposed on the privilege to transfer properties without valuable consideration. Thus, it is computed on a
cumulative basis over a period of one calendar year.
a. Donor’s Tax c. Estate Tax
b. Value-Added Tax d. Income Tax

44.It is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the
Philippines and on importation of goods into the Philippines.
a. Donor’s Tax c. Estate Tax
b. Value-Added Tax d. Income Tax

45. It is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or
transfer of an obligation, rights, or property incident thereto.
a. Documentary Stamp Tax c. Creditable Witholding Tax
b. Capital Gains Tax d. Expanded Witholding Tax

46. ____________ is a final tax imposed on the gains presumed to have been realized by the seller from the sale,
exchange, or other disposition of real property located in the Philippines, classified as capital assets, including pacto de
retro sales and other forms of conditional sale
a. Documentary Stamp Tax c. Creditable Witholding Tax
b. Capital Gains Tax d. Expanded Witholding Tax

47. ____________ is the tax withheld from the income paid by the payor which may be deducted from the income tax
liability of the payee.
a. Documentary Stamp Tax c. Creditable Witholding Tax
b. Capital Gains Tax d. Expanded Witholding Tax

48. ____________ is a system of collecting taxes whereby the taxes withheld on certain income payments are intended to
equal or at least approximate the tax due of the payee on said income.
a. Documentary Stamp Tax c. Creditable Witholding Tax
b. Capital Gains Tax d. Expanded Witholding Tax

49. All income of whatever kind and derived by taxpayer from whatever source, including but not limited to compensation
for services, gross income derived from conduct of trade or business or exercise of a profession, gains derived from
dealings in property, interest, rents, royalties, dividends, annuities, prizes and winnings, pensions, etc.
a. Active Income c. Gross Income
b. Capital Appreciation d. Passive Income

50. A municipality may levy an annual ad valorem tax on real property such as land, building, machinery, and other
improvement only if
A. the real property is within the Metropolitan Manila Area. C. the DILG authorizes it to do so.

B. the real property is located in the municipality.
 D. the power is delegated to it by the province.

51. Which theory in taxation states that without taxes, a government would be paralyzed for lack of power to activate and
operate it, resulting in its destruction?
a. Power to destroy theory c. Sumptuary theory
b. Lifeblood theory d. Symbiotic doctrine

52. A taxpayer may be deemed to be habitually engaged in the real estate business if he or she has register at least
_______ taxable real estate transactions during the preceding year.
a. eight (8) c. six (6)
b. ten (10) d. twelve (12)

53. Capital gains tax is paid _______ days following the receipt of the first downpayment for following each subsequent
installment payment, whichever is applicable, in case of sale of Real Property on ____________.
a. 60 days : Cash Sale c. 30 days: Installment Plan
b. 45 days: Barter Sale d. 45 days: Deferred Plan

54. Payments which the seller receives before or upon execution of the installment sale, and payments which he expects
or is scheduled to receive in cash or property during the calendar year when the sale or disposition of real property was
made.
a. Monthly amortization c. Initial Payments
b. Downpayment Installments d. Deferred Payments
55. Tong Siok, a Chinese billionaire and a Canadian resident, died and left assets in China valued at P80 billion and in the
Philippines assets valued at P20 billion. For Philippine estate tax purposes the allowable deductions for expenses, losses,
indebtedness, and taxes, property previously taxed, transfers for public use, and the share of his surviving spouse in their
conjugal partnership amounted to P15 billion. Tong's gross estate for Philippine estate tax purposes is
a. Php. 5 Billion c. Php. 85 Billion
b. Php. 100 Billion d. Php. 20 Billion

56. It is a certification issued by the Commissioner or his duly authorized representative attesting that the transfer and
conveyance of land, buildings/ improvements arising from sale, barter or exchange have been reported and the taxes due
inclusive of documentary stamp tax, have been fully paid.
a. Certificate Authorizing Registration c. Tax Declaration
b. Certificate Authenticating Registration d. Tax Map

57. The dwelling house including the land on which it is situated, where the husband and wife or an unmarried individual,
whether or not qualified as head of family, and members of his family reside.
a. Principal Residence c. Domicile
b. Half-way House d. Ancestral House

58. If the right of redemption is not exercised by the mortgagor in a foreclosure sale of a real property, the sale of a
property that is considered as an ordinary asset is subject to:
a. Creditable Withholding Tax c. Documentary Stamp Tax
b. Value-Added Tax d. All of the Above

59. The documentary stamp tax rate on “Deeds of Sale and Conveyances of Real Properties”
a. P3.00 for the first P2,000, then P1,000 for every succeeding P1,000,000 or a fraction thereof for each year of
the term of the said contract of lease.
b. P20.00 for the first P5,000 or fraction thereof, then, P10.00 for every succeeding P5,000 or a fraction thereof
c. P15.00 for every P1,000 or a fraction thereof of the tax base.
d. None of the above

60. The regular conduct or pursuit of a commercial or economic activity, including transactions incidental thereto, by any
person, regardless of whether or not the person engaged therein is a non-stock, non-profit private organization or
government entity.
a. “Business as Usual” c. “In the Course of Trade or Business”
b. Going Concern d. None of the above.

II. Local Taxation

61. The following are considered as Local Taxing Authority, EXCEPT:

a. Sangguniang Panlalawigan c. Sangguniang Kabataan
b. Sangguniang Panlungsod d. Sangguniang Bayan

62. As per Sec.135 of the Local Government Code, the Transfer Tax for real property ownership on provinces is:
a. Not more than 75% of 1% or not more than 50% of the maximum rate for provinces
b. Not more than 50% of 1%
c. Not more than 25% of 1%
d. Not more than 10% of 1%

63. As per Sec.135 of the Local Government Code, the Transfer Tax for real property ownership on cities is:
a. Not more than 75% of 1% or not more than 50% of the maximum rate for provinces
b. Not more than 50% of 1%
c. Not more than 25% of 1%
d. Not more than 10% of 1%

64. The Local Government Units is authorized to adjust the above rates not oftener than once every ________ but not to
exceed 10% of the rates fixed under the Local Government code.
a. 3 years c. 2 years
b.5 years d. 1 year

65. Transfer tax must be settled ________ from the execution of the deed of sale, barter or donation or any other mode of
transfer of ownership.
a. 3 months c. 120 days
b. 60 days d. 90 days

66. This type of tax applies to natural persons only and entitles them the privilege to exercise or practice one’s profession
requiring government examination.
a. Income Tax c. Professional Tax
b. Capital Gains Tax d. Business Tax

67. What is the rule on the taxability of income that a government educational institution derives from its school
operations? Such income is
A. subject to 10% tax on its net taxable income as if it is a proprietary educational institution.

B. Exempt from income taxation if it is actually, directly, and exclusively used for educational purposes.
C. subject to the ordinary income tax rates with respect to incomes derived from educational activities.
D. Exempt from income taxation in the same manner as government-owned and controlled corporations.
68. A written claim for refund or credit must be filed with ______________.
a. City/ Provincial Engineer c. City/ Registrar Assessor
b. City/ Provincial Registrar d. Local Treasurer

69. The following statements are true about the nature of real property tax, except:
a. It is a local tax c. It is imposed on the use and not ownership
b. It is an ad valorem tax d. None of the above

70. Which of the following statements is TRUE about governing principles in real property taxation
a. Appraised at its current and fair market value
b. Classified for assessment purposes on the basis of its actual use
c. Assessed on the basis of a uniform classification
d. All of the above

71. _________ embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus, which
may not be attached, permanently or temporarily, to the real property.
a. Gadgetry c. Improvement
b. Mechanism d. Machinery

72. A valuable addition made to a property or an amelioration in its condition, amounting to more than a mere repair or
replacement of parts involving capital expenditures and labor, which is intended to enhance its value.
a. Gadgetry c. Improvement
b. Mechanism d. Machinery

73. As per Sec.233 of the Local Government Code, the Real Property Tax on provinces is
a. Not exceeding 4% of the assessed value c. Not exceeding 2% of the assessed value
b. Not exceeding 3% of the assessed value d. Not exceeding 1% of the assessed value

74. As per Sec.233 of the Local Government Code, the Real Property Tax on cities is
a. Not exceeding 4% of the assessed value c. Not exceeding 2% of the assessed value
b. Not exceeding 3% of the assessed value d. Not exceeding 1% of the assessed value

75. __________ is land identified as forest or reserved area by the government which may or may not be granted to a
concessionaire, licensee, lessee or permitee.
a. Timber land c. Mineral Land
b. Agricultural Land d. Commercial Land

76. It is the fair market value of the real property multiplied by the assessment level. It is synonymous to taxable value.
a. Market Value c. Investment Value
b. Assessed Value d. Net Book Value

77. It is the interest for late payment of real property tax. ______ for each month on unpaid amount until the delinquent
amount is paid provided in no case the total interest shall exceed 36 months.
a. 2% c. 4%
b. 3% d. 5%

78. Tax payers receive _______ discount for advanced prompt payment of Real Property Taxes
a. 10% c. 20%
b. 15% d. 30%

79. Which of the following are considered exempted from Real Property Tax?
a. Real property owned by the Republic of the Philippines
b. Machinery and equipment used for pollution control and environmental protection
c. Real Property owned by duly registered cooperatives as provided under RA 6938
d. All of the above

80. As per the Local Government Code, lands located in a city or municipality with more than 1000sqm in area wherein
one-half of which remain unutilized or unimproved by the owner of the property may be considered as ____________
a. an Idle Land c. Urban Land
b. Residential Land. D. None of the above
1. c 41. d
2. a 42. c
3. b 43. a
4. d 44. b
5. a 45. a
6. c 46. b
7. b 47. c
8. c 48. d
9. c 49. c
10. b 50. a
11. d 51. b
12. c 52. c
13. d 53. c
14. d 54. c
15. b 55. d
16. b 56. a
17. b 57. a
18. c 58. d
19. c 59. c
20. a 60. c
21. a 61. c
22. d 62. b
23. b 63. a
24. c 64. b
25. c 65. b
26. a 66. c
27. d 67. b
28. d 68. d
29. a 69. d
30. c 70. d
31. c 71. d
32. b 72. d
33. c 73. d
34. d 74. c
35. b 75. a
36. d 76. b
37. d 77. a
38. b 78. c
39. d 79. d
40. d 80. a