“For example, for 2018, the 0% rate for long-term gains and qualified dividends will apply for taxpayers with taxable income under about $38,600 on individual returns and about $77,200 on joint returns.”
Wow, that’s crazy. That could have massive implications for retirement.
One gray area is whether people who own real estate in their own names and file their rental income on Schedule E would qualify for the pass-through deduction.
“It’s not 100 percent clear,” said Jeff Levine, director of financial planning with Blueprint Wealth Alliance. To get the percent deduction, “it has to be a qualified trade or business.” The new law does not clearly define trade or business, and the term is defined differently in different parts of the tax code. “Depending on IRS interpretation, a taxpayer’s involvement in the rental property could be a factor” in whether he or she qualifies.
Luscombe said he believes Congress intended real estate investors who use Schedule E to qualify for the deduction, and a congressional committee report supports that idea.
Weissenberg said they clearly would qualify for the deduction.
Nelson also said they should qualify, “but we’ll have to see what the IRS says” when it issues regulations.
Real estate investors do not need to form a limited liability company to take this deduction, Nelson added. They can put property into an LLC (many do for liability reasons) as long as it’s not taxed as a corporation.
Any idea when will we get clarity on this new deduction for landlords who have property in their own names?
I have long said the tax cut will be hugely beneficial to us the capitalists. What it does to so-called middle class is much less clear. USD also got weaker instead of stronger like what you would expect if companies repatriated huge sums of offshore money. That tells me market is somewhat worried about deficit and the debt. Longer term effect is unclear. Short term it lifts up markets animal spirit which again benefits us capitalists.
Using their own numbers, it has added an average of 100,000 units a year nationwide. We spend $9B on it, so that’s $90K/person helped. I didn’t realize helping 100,000 people a year at a cost of $90k each was successful program. That program could never scale to help enough people. It’d take more money than the entire federal budget. By their own admission, it’s only helped on 30% of units.
Notice they don’t discuss how to make housing cheaper with less local regulations.