Certified Pennsylvania Evaluator Practice Exam

Which expense is expressly allowed under property management standards?

1. Mortgage interest

2. Utilities

3. Income taxes

4. Capital improvements

The correct answer is: Utilities

The correct choice reflects an expense that is explicitly recognized as part of operational costs under property management standards. Utilities are essential expenses incurred in maintaining the functionality and livability of a property. Property management standards often outline that operational costs include routine expenses necessary for the day-to-day operation of a property, and utilities fall within this category. This includes expenses for services such as electricity, water, and gas, which are vital for ensuring that the property remains functional for tenants or occupants. In contrast, the other options represent costs that may be incurred in property management but are not necessarily classified under operational expenses in the same way. Mortgage interest and income taxes are often considered financial obligations or external costs rather than regular operational expenses. Capital improvements, while essential for increasing the value of a property, represent significant expenditures that typically fall outside the scope of routine operational costs. Therefore, utilities are recognized as a necessary and express expense allowable under property management standards.