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IRS Creates a New “Safe Harbor” for Section 199A Rental Properties

Posted on February 8th, 2019

Safe harbor! It sounds wonderful.

Obviously, you are going to be comfortable in a safe harbor. And if you said you don’t want comfort, you might be thought of as a little loony.

You may sense that we are not jumping with joy about this new safe harbor for Section 199A rental property. It’s true; our joy quotient is a little low on this safe harbor because of the work involved.

Our feeling is that you did this work, so your property is a trade or business with no safe harbor needed. Of course, the safe harbor gives you comfort, so we need to examine what’s involved.

With the new safe harbor, the IRS thinks it is your new friend when it comes to claiming the Section 199A 20 percent tax deduction on your rental real estate profits. Read More…

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Like-kind Exchanges are Limited to Real Property

Posted on January 3rd, 2019

The Tax Cuts and Jobs Act, passed in December 2017, made tax law changes that will affect virtually every business and individual in 2018 and the years ahead. One tax provision that taxpayers should be aware of is that like-kind exchanges are now generally limited to exchanges of real property. Here’s what you need to know: Read More…

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How to Broker Better Tax Breaks on Rental Properties

Posted on December 19th, 2018

How Real Estate Tax Law Can Help – or Hurt – Your Bottom Line

If you’re in the real estate business as a broker and own rental properties, there are critical real estate tax law stipulations that impact your tax posture.

Most importantly, how much time and money you spend on rental properties, and how those activities are categorized will influence whether or not you can take deductions on your tax returns – and how large those deductions can be.

Read More…

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The New Tax Law for Real Estate Brokers: How You Can Benefit

Posted on December 3rd, 2018

The New TCJA Taxes for Real Estate Brokers: What You Need to Know

When the Tax Cuts and Jobs Act (TCJA) became law in December 2017, real estate professionals immediately began contacting us with questions. Are there new breaks on taxes for real estate brokers? Will the TCJA increase taxes for real estate brokers?

However, the most common question we’re getting here at Robert P. Russo CPA is this: How can I get that new 20% qualified business income (QBI) deduction? That’s what we’ll focus on now… Read More…

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Transition Rule for Rehabilitation Tax Credit

Posted on December 1st, 2018

The Rehabilitation Tax Credit offers an incentive for owners to renovate and restore old or historic buildings. Tax reform legislation passed in December 2017 changed when the credit is claimed and provides a transition rule, which is summarized below: Read More…

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Ten Tax Tips for Individuals Selling a Home this Year

Posted on September 5th, 2018

In most cases, gains from sales are taxable. But did you know that if you sell your home, you may not have to pay taxes? Here are ten facts to keep in mind if you sell your home this year. Read More…

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Changes on the Homefront: Deducting Home Equity Interest Under the Tax Cuts and Jobs Act of 2017

Posted on July 5th, 2018

One of the key tax benefits of owning a home is the ability to deduct mortgage interest. No worries, under the Tax Cuts and Jobs Act (TCJA) of 2017, you can continue to do so.

The rules state that in 2018 and going forward, you can deduct the interest on a home mortgage of $750,000 or less (this must be your principal residence). This is a change from the previous $1 million limit. Read More…

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Tax Rules for Rental Income from Second Homes

Posted on July 2nd, 2018

Tax rules on rental income from second homes can be complicated, particularly if you rent the home out for several months of the year and also use the home yourself.

There is, however, one provision that is not complicated. Homeowners who rent out their property for 14 or fewer days a year can pocket the rental income, tax-free. In other words, if you live close to a vacation destination such as the beach or mountains, you may be able to make some extra cash by renting out your home (principal residence) when you go on vacation–as long as it’s two weeks or less. Although you can’t take depreciation or deduct for maintenance, you can deduct mortgage interest, property taxes, and casualty losses on Schedule A (1040), Itemized Deductions. Read More…

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Home Equity Loan Interest Still Deductible – Tax Tip

Posted on May 2nd, 2018

The Tax Cuts and Jobs Act has resulted in questions from taxpayers about many tax provisions including whether interest paid on home equity loans is still deductible. The good news is that despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labeled. Read More…

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Safe Harbors Help Taxpayers Suffering Property Losses

Posted on January 5th, 2018

Tax Tip

Safe harbor methods are used by individual taxpayers when determining the amount of their casualty and theft losses for their homes and personal belongings. Four of the safe harbor methods may be used for any qualifying casualty or theft loss, and three are specifically applicable only to losses occurring as a result of a Federally declared disaster.

For instance, one of the safe harbor methods allows a homeowner to determine the amount of loss, up to $20,000, by obtaining a contractor estimate of repair costs. Another safe harbor method allows a homeowner to determine the amount of loss resulting from a Federally declared disaster using the repair costs on a signed contract prepared by a licensed contractor. The guidance also provides a handy table for determining the value of personal belongings damaged, destroyed or stolen as a result of a Federally declared disaster.

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