California Real Estate Practice Exam

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Prepare for the California Real Estate Exam. Study with flashcards and questions featuring hints and explanations. Get exam-ready!

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Net income is determined by an appraiser using which one of the following?

Capital additions
Depreciation reserves
Mortgage amortization and interest
Real property taxes

The correct answer is: Real property taxes

Net income is determined by subtracting operating expenses from effective gross income. Capital additions, depreciation reserves, and mortgage amortization and interest are subcategories of operating expenses. Real property taxes, on the other hand, are not included in operating expenses and are instead subtracted from gross operating income to determine net income.