05 Nov Do you receive the 20% tax deduction on your rental property income?
On October 1, 2019 the IRS announced that it finalized the safe harbor election for rental property to qualify as a trade or business for the 199A deduction. While it is merely the same as the proposed regulations issued earlier this year, there is one significant change. The election no longer requires a separate signature! This makes it easier for our real estate investing and small business qualified clients to benefit for this 20 percent tax deduction.
Do you receive the 20% tax deduction (Section 199A QBID) on your rental property income? Now it’s easier!
Many of our tax and small business clients own rental property, and Section 199A was enacted on December 22, 2017 as part of the Tax Cut and Jobs Act. It has since been amended and modified for various reasons. This is the most recent. We, at Unbehagen Advisors, have been keeping a close eye on these IRS modifications to better benefit our small business clients, and to also benefit our real estate investor clients.
The 20 percent deduction under Section 199A on certain small business profits (Qualified Business Income Deduction or QBID) is also allowed on certain rental property net income if requirements are met. In brief summary, some of those requirements to qualify include time spent on management of properties, how records are maintained and how the business of rental properties is conducted – among other requirements. For further understanding, see the News Release and Rev. Proc. 2019-38 for more details, and, of course, you should always contact our team as well for customized tax advice.
Each taxpayer should discuss their individual requirements with our award-winning team of tax professionals and tax accountants to determine if they meet the requirements for the 20 percent deduction (QBID) for small business and/or rental property income. If you qualify, there may be a nice tax deduction of 20 percent in your future.
We have proudly served the small business and real estate investment community since 1992. We have services in tax, accounting, consulting, payroll and insurance to benefit our valued clients and YOU. We are grateful that you are our client! Here’s to your success!