The Tax Cuts and Jobs Act (TCJA) tax reform added new tax code Section 199A, which created a 20 percent tax deduction possibility for you if your rental property (a) has profits and (b) can qualify as a trade or business.
As the law now stands, with rentals that achieve trade or business status, you win. Your business-status rental property creates the following five possible tax benefits for you:
1.
Your rental property can create a Section 199A tax deduction of up to 20 percent of the rental property’s qualified business income (QBI).
2.
Your rental property receives tax-favored Section 1231 treatment, which (upon sale) delivers with a tax loss—an ordinary loss (the best kind of loss)—and with a tax-favored capital gain (the best kind of gain).
3.
Your rental property can create the home-office deduction if you meet the other home-office requirements of exclusive and regular use.
4.
Your rental-business status creates rental property deductions for the cost of your attendance at rental property meetings, seminars, and conventions.
5.
Your rental-business status enables Section 179 expensing for certain assets used in the business (special rules apply to the real property).
To obtain the benefits listed above, you must have a rental that qualifies as a trade or business. ... Log in to view full article.
