If you own rental real estate, the new Tax Cuts and Jobs Act (TCJA) has favorable changes that you need to know about. Here’s the story.
Lower Ordinary Income Tax Rates for 2018-2025
If you own property as an individual or via a pass-through entity (partnership, LLC treated as a partnership for tax purposes, or S corporation), net income from rental properties is taxed at your personal federal income tax rates. Here are the 2018 ordinary income rates and brackets under the TCJA.
| Single | Joint | HOH* |
10% tax bracket | $ 0 to 9,525 | $ 0 to 19,050 | $ 0 to 13,600 |
Beginning of 12% bracket | 9,526 | 19,051 | 13,601 |
Beginning of 22% bracket | 38,701 | 77,401 | 51,801 |
Beginning of 24% bracket | 82,501 | 165,001 | 82,501 |
Beginning of 32% bracket | 157,501 | 315,001 | 157,501 |
Beginning of 35% bracket | 200,001 | 400,001 | 200,001 |
Beginning of 37% bracket | 500,001 | 600,001 | 500,001 |
*Head of household | | | |
You will probably come out ahead under the new law, but if you were in the 33 percent marginal tax bracket for 2017, you could be in the 35 percent marginal bracket for 2018. That unfavorable news mainly affects singles and heads of households with 2018 taxable income in the $200,000-$400,000 range. If you’re in that category, the lower rates on income below $200,000 will offset some or all ... Log in to view full article.
