Question

Valarie purchases a rental house and land for $180,000 during a depressed real estate market. Appraisals place the value of the house at $140,000 and the land at $60,000 (a total of $200,000). What is Valarie's basis in the house

Answer 1

$126,000

Step-by-step explanation:

Calculation for Valarie's basis in the house

First step is to calculate the House ratio

House ratio = 140,000/200,000

House ratio= 70%

Now let calculate Valarie's basis in the house

Valarie's basis in the house = 180,000*70% = Valarie's basis in the house=$126,000

Therefore Valarie's basis in the house will be $126,000