The IRS, in its new proposed Section 199A regulations, defines when a rental property qualifies for the 20 percent tax deduction under tax code Section 199A.
One part of the good news on this clarification is that it does not require learning any new regulations or rules. Existing rules govern.
The existing rules require that you know when your rental is a tax law–defined rental business and when it is not. For the new 20 percent tax deduction under Section 199A, you want rentals that the tax law deems businesses.
You may find the idea of a rental property as a business strange because you report the rental on Schedule E of your Form 1040.
But as you learn in this article, Schedule E rentals are often businesses for purposes of not only the Section 199A tax deduction but also additional tax code sections, giving you even juicier tax benefits. ... Log in to view full article.