Personal Propertyâ€"Property that is not permanently attached to the real estate. Appliances are personal property. Residential Propertyâ€"Real estate designed and intended as dwellings, including single- and multifamily homes, but not hotels or motels. Mortgageâ€"A lien against a property that secures a mortgage loan or note. Adjustable Rate Mortgage (ARM)â€"A mortgage loan in which the interest rate is not constant over the life of the loan, but is adjusted periodically according to a predetermined formula or index. Principalâ€"The amount of a loan, exclusive of any interest. Balloonâ€"A provision in a loan that requires the principal balance to be paid off in a lump sum before the loan would be retired through normal amortization. Consumer Price Index (CPI)â€"An index published by the U.S. Bureau of Labor Statistics and widely used as a measure of inflation. The index estimates the cost of buying a fixed group of goods and services and compares that cost to the base year (1982) that was assigned an index value of 100. The CPI is commonly used in escalation clauses of commercial real estate leases so that the rent generated by those leases will keep pace with inflation. Also, cost-of-living index. Equityâ€"The difference between a property’s value and the balance of the debt against it. FSBOâ€"For Sale by Owner; pronounced â€Fizzbo.†Income Approachâ€"A method of real estate appraisal that takes a property’s project income stream and capitalizes it to estimate the value of the asset. Inflation Rateâ€"The annual rate at which a currency loses purchasing power. Limited Liability Company (LLC)â€"A type of business entity that is taxed like a partnership (i.e., pass-through taxation) but that also provides the limited liability protection of a corporation. Straight-Line Depreciationâ€"A depreciation method that allows the owner to write off an asset’s basis in equal amounts over its useful life. Tax Shelterâ€"An investment vehicle that can shield a part of an investor’s ordinary income from taxation. Useful Lifeâ€"The length of time, as specified in the tax code, over which an asset may be depreciated. The Useful Life for tax purposes is not necessarily the same as the actual physical life expectancy of a particular asset.
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