Investments · Module 4 of 5
A building, or a piece of one
Owning a rental property, real estate funds, and why a property is only worth what someone will pay for it.
Key terms in A building, or a piece of one
- Real estate investment trust (REIT)
A real estate investment trust is a company that owns or finances income-producing real estate. Congress created the structure in 1960 so that individuals could take part in large property holdings without buying or managing buildings themselves. Properties can include offices, apartments, hotels, warehouses and mortgages.
Source: FINRA, Real Estate Investment Trusts: Alternatives to Ownership
- Rental income
Rental income is cash, or the fair market value of property or services, received in exchange for the use of real estate or other property. Under U.S. tax rules it is taxable to the owner. Ordinary costs of keeping the property, such as repairs and operating expenses, can generally be subtracted from it.
Source: Internal Revenue Service, Topic no. 414, Rental income and expenses
- Depreciation
Depreciation is the recovery of a property's cost over a number of years through annual deductions, rather than all at once. In U.S. tax rules it applies only to the business or income-producing use of assets with a limited useful life. Buildings may qualify, but land never does.
Source: Internal Revenue Service, Topic no. 704, Depreciation
Every term on Lever is in the money glossary.
About this module
A building, or a piece of one is part of Investments, one of 15 subjects in Lever. It’s a short run of 5 lessons, about 13 minutes in all, so you can finish it in one sitting.
Every lesson takes one idea at a time. You read it with the math worked out step by step, answer a question that puts it to use, then see why the right answer is right and why the others aren’t.
It’s for anyone who was never taught this, and you don’t need to know anything first. Every lesson is free. Lever works out what you already know, so you can start here or let your path bring you to it.
More in Investments
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1
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2
Metal, and what people collect
Gold, silver, raw materials and collectibles: what you really pay for them, and the paper versions that skip the storage.
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3
A holding with no issuer
What crypto is, how stablecoins try to hold a steady price, and how much of something this risky you can afford to own.
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5
A piece of one company, not many
Owning single stocks versus funds, reading a stock quote, and the part of the return a price chart doesn’t show.
5 lessons
Try this module
It’s part of Investments. Lever will bring it to you when you’re ready, or you can go straight there.