You own a house that you rent for $1,200 a month.The maintenance expenses on the house average $200 a month.The house cost $89,000 when you purchased it several years ago.A recent appraisal on the house valued it at $190,000.The annual property taxes are $5,000.If you sell the house you will incur $10,000 in expenses.You are deciding whether to sell the house or convert it for your own use as a professional office.What value should you place on this house when analyzing the option of using it as a professional office?

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Quizplus · Accepted Answer

When analyzing the option of using the house as a professional office, the rental income and maintenance expenses become irrelevant. Therefore, we should focus on the current value of the property (which is $190,000) and subtract any potential selling expenses (which is $10,000). This brings the value down to $180,000. Therefore, the value we should place on the house when analyzing the option of using it as a professional office is $180,000.

You Own a House That You Rent for $1,200 a Month.The