When a sale includes interests beyond the real estate, what should be deducted from the real estate value?

• A. The closing costs
• B. The non-real estate interests
• C. The property taxes
• D. The parking rights

Answer: (B)

When a sale includes items that aren’t real estate, you must separate those non-real-estate interests from the price to get the value of the real property itself. The sale price reflects both the value of the real estate and the value of any extras (personal property, business interests, parking rights that aren’t part of the property, etc.). To isolate the real estate value, subtract the value of those non-real estate interests from the total price. For example, if the sale price is $500,000 and non-real-estate components are valued at $60,000, the real estate value would be $440,000. Closing costs or property taxes aren’t subtracted to determine real property value, and parking rights should be treated as part of the non-real estate interests if they aren’t inseparably tied to the real estate.