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TOPICAL REAL ESTATE DICTIONARY Top 20 Terms Agents Buying Closing Contract Credit Inspection Law Financing Selling Taxes/Insurance Taxes/Insurance assessed value A tax assessor's determination of the value of a home in order to calculate a tax base. capital gains tax A tax placed on profits from the sale of real estate or investments. conveyance tax A tax imposed on the transfer of real property. earthquake insurance A policy that provides coverage against damage to a home from an earthquake. flood insurance Hazard coverage that is required in designated flood areas. homeowner's insurance This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage. home warranty A type of insurance that covers repairs to certain parts of a house and some fixtures. insurance Owners and buyers can purchase various types of insurance including hazard, private mortgage, and earthquake. The policies guarantee compensation for specific losses. mortgage-interest deduction The tax write-off that the Internal Revenue Service allows most owners to claim for annual interest payments made on real estate loans. passive loss A tax term that refers to any loss from a passive activity, such as the ownership but not the operation of a piece of rental real estate. property tax Tax paid on privately owned property. Property taxes are usually paid semiannually, or monthly if the lender requires. The amount is based on local tax rates and assessed property value. property tax deduction The U.S. tax code allows homeowners to deduct the amount they have paid in property taxes. tax deduction A tax break given by the government. Mortgage interest, loan points, and property taxes can be deducted. tax lien A lien placed against a property for nonpayment of taxes. tax shelter A term often applied to real estate investment, referring to various tax advantages. title insurance A policy issued to lenders and buyers to protect against loss due to disputed property ownership. transfer tax An assessment by state or local authorities at the time a piece of property changes hands.