Real Estate Rental Tax Update: Complete with In Depth §199A Planning

Author: Bradley Burnett

The Tax Cuts Jobs Act turns taxation of rental real estate on its ear. Some changes are good, some are bad (or, at least, potentially bad, if we don’t know what we are doing). The §199A deduction could be crazy good for rental income, but crazy bad for rental losses. §163(j) stands as an ominous threat, like an ominous storm on the horizon. Bonus and §179 have been revamped, but is that all good or dangerous for real estate rentals? The answers lie in the particular facts of the situation.

Publication Date: September 2019

Designed For
Anyone with the desire to be kept up to date with recent developments in the federal tax law affecting rental real estate.

Topics Covered

• TCJA — Comparing Top Income Tax Rates
• Choices, Choices
• QBID and Rental Real Estate
• Is Rental Real Estate a Business?
• What Do the Neighbors Say?
• Rental Real Estate — Safe Harbor Notice 2019‐7
• Interaction of §199A and §6662 Accuracy Penalty
• Loss Limitation ‐ Hurdles
• SSTB — Crack and Pack Strategy
• Wage or Wage/Property Limit
• Effect of Business Losses on QBID
• Effect of Carryover QB Loss on QBID
• §199A and Aggregation
• Not Aggregated
• Putting a Wrap On It

Learning Objectives

• Identify relevant recent federal tax law developments affecting real estate and its owners
• Recognize how to apply TCJA's §199A, §163(j), and bonus depreciation
• Identify a consequence of real estate as a business related to net rental income
• Identify the percent if a partnership has a regular tax rate of 35%, the best possible effective rate after the QBI deduction
• Recognize which of the provisions related to QBID is not final
• Identify an area related to aggregation that was impacted by the final regulations
• Identify the date when the final Section 199A regulations were released
• Recognize what is reduced by QBID
• Identify which court case found that mere attempts to rent out prior personal residence with no success does not make a single-family residence a business
• Identify the effective rate with full QBI deduction for a sole proprietor that has a regular tax rate of 24%
• Identify the tentative QBI deduction against qualified business income
• Recognize which type of income is included in QBI
• Describe which QBI provision related to the sale of business assets is not considered final (i.e., it is only proposed)
• Recognize which of the following statement is correct regarding the effect of current year business losses on QBID
• Identify what year can you elect to aggregate on an amended return with respect to Section 199A

Level
Update

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic understanding of real estate rentals.

Advance Preparation
None