By topic: Land
The Tax Cuts and Jobs Act (TCJA) likely requires that you rethink the tax strategies you were using on your vacant land investments. And the TCJA changes may be such that you have to rethink vacant land as an investment, at least for the years impacted by the TCJA.
Tax reform made it more difficult for you to deduct your legal fees. But don’t worry: the tax law still allows for a full deduction of your legal fees in certain circumstances. We’ll review four ways you can continue to deduct your legal fees after tax reform.
The tax implications for your office building and rentals have changed. Now when you fix up and improve those buildings, you need to be alert to additional savings that were not available in some prior years. Further, if you are buying a new building, you absolutely need to examine how you can create deductions where none existed before.
One of your first tax steps in buying a rental property is to go through each line item in the closing statement and assign it to one of the following three categories: (1) basis, (2) loan acquisition, or (3) operations. With basis, you allocate costs to land, land improvements, buildings (including perhaps building components), and equipment. Loan acquisition falls into either costs of getting the loan or costs to reduce the interest rate. The assignments have a direct impact on how quickly you realize the deductions.
Would a unique downtown historic building be the perfect site for your office? It may be more affordable than you think. Your state and federal governments want you to rehabilitate these buildings and give you a financial incentive to do so. Here is their offer to you: if you invest in and restore a historic building, the governments will give you tax credits to offset a huge chunk of the cost of restoration.
In this article, part 5 of the entertainment facility discussion, you learn how lawmakers take shots at your hunting activities. First, both real and personal property involved in your hunting activities face the entertainment facility disallowance rules. Leasing land for the hunt has its problems too. But if you like to hunt, and if you would like to learn how to deduct your hunting, this article is for you!
Do you invest in real estate? Are you an investor or a dealer? Make sure you put the nine factors to work for you in your proof of investor or dealer status.
The tax strategy of renting property you own personally to your businesses needs your attention if you want tax benefits. Similarly, special recharacterization rules apply to rentals of land and also when land is a big part of the rental.
Section 1237 grants a safe-harbor to qualified taxpayers who want to subdivide land. The safe-harbor requires the taxpayer to pass seven tests, but then rewards the taxpayer with tax-favored capital gains treatment (versus ordinary income treatment).
Good tax planning can avoid ordinary income treatment on the subdivision of land. The planning involves avoiding the partnership entity and using an S corp. for development.
You can be a dealer with respect to some properties and an investor with respect to others. You can also subdivide lots and obtain tax-favored capital gain treatment, but you need the right numbers and a good plan.