New tax law
Click here for Top Ten Discussions. CLICK HERE for Q & A Homepage
Receive Free Rental Owner Updates Email:  
MrLandlord Q & A
     
     
New tax law (by Marv [IL]) Jan 12, 2018 6:02 AM
       New tax law (by David [MI]) Jan 12, 2018 6:14 AM
       New tax law (by Richard [MI]) Jan 12, 2018 8:21 AM
       New tax law (by NC INVESTOR [NC]) Jan 12, 2018 9:16 AM
       New tax law (by Chris [CT]) Jan 12, 2018 10:21 AM
       New tax law (by David [MI]) Jan 12, 2018 12:49 PM
       New tax law (by Marv [IL]) Jan 12, 2018 1:43 PM
       New tax law (by myob [GA]) Jan 12, 2018 2:31 PM
       New tax law (by myob [GA]) Jan 12, 2018 2:31 PM
       New tax law (by David [MI]) Jan 12, 2018 5:59 PM
       New tax law (by nhsailmaker [NH]) Jan 13, 2018 3:49 AM
       New tax law (by Marv [IL]) Jan 13, 2018 8:56 AM
       New tax law (by Robin [WI]) Jan 13, 2018 10:39 AM
       New tax law (by Ray-N-Pa [PA]) Jan 13, 2018 4:52 PM
       New tax law (by NC INVESTOR [NC]) Jan 14, 2018 9:37 AM
       New tax law (by Marv [IL]) Jan 15, 2018 5:43 AM
       New tax law (by John... [MI]) Jan 15, 2018 6:39 AM
       New tax law (by WMH [NC]) Jan 15, 2018 8:35 AM
       New tax law (by NC INVESTOR [NC]) Jan 15, 2018 9:17 AM
       New tax law (by David [MI]) Jan 15, 2018 9:27 AM
       New tax law (by NC INVESTOR [NC]) Jan 15, 2018 12:55 PM
       New tax law (by John Hyre [OH]) Jan 15, 2018 2:06 PM
       New tax law (by Marv [IL]) Jan 16, 2018 5:45 AM
       New tax law (by Hyre [OH]) Jan 16, 2018 7:02 AM

Click here to reply to this discussion.
Click Here to send this discussion to a friend

New tax law (by Marv [IL]) Posted on: Jan 12, 2018 6:02 AM
Message:

I talked with some new tax law seminar teachers yesterday.

I asked about the 20% credit for landlords. General opinion was that as the law is written, landlords will get the deduction. Although they all agreed that a new definition of "business" will have to be made that includes landlords. We will wait for clarification.

Landlords can now take Sec 179 depreciation on personal property bought for rentals. lawn mowers, refrigerators, washers, dryers, etc.

Commercial buildings can now expense things like roofs, electrical systems, security systems, furnace, A/C, etc.

If I remember correctly, the 100% bonus depreciation is not available for rental property. --173.15.xx.xxx




New tax law (by David [MI]) Posted on: Jan 12, 2018 6:14 AM
Message:

Can you expense the entire amount of a new rental property, minus the land? --12.156.xxx.xx




New tax law (by Richard [MI]) Posted on: Jan 12, 2018 8:21 AM
Message:

If like to know the answer to that too!. --23.121.xx.xxx




New tax law (by NC INVESTOR [NC]) Posted on: Jan 12, 2018 9:16 AM
Message:

Per the tax webinar with John Hyre bonus depreciation is allowed for pass through companies which includes sole proprietors. If the IRS recognizes you as a business then LL's are included.

No you cannot expense the purchase price of a rental property. The property excluding the land will still be depreciated over 27.5 years. --71.75.xx.xx




New tax law (by Chris [CT]) Posted on: Jan 12, 2018 10:21 AM
Message:

I briefly met with my accountant this morning to wrap up the 2017 tax year. He said overall the changes would benefit my business. --24.45.xxx.xx




New tax law (by David [MI]) Posted on: Jan 12, 2018 12:49 PM
Message:

Unbelievable. I guess the president being a RE guy didn't help. Can't believe rentals aren't included for immediate deduction. --12.156.xxx.xx




New tax law (by Marv [IL]) Posted on: Jan 12, 2018 1:43 PM
Message:

As I said, we need clarification on the definition of "Business".

One part of the 20% credit talks about the greater of 50% of wages paid OR 25% of wages plus 2.5% of assets.

This is tailor made for large commercial buildings paying very little wages. -0- wages plus 2.5% of building cost. --173.15.xx.xxx




New tax law (by myob [GA]) Posted on: Jan 12, 2018 2:31 PM
Message:

David MI if nothing else i've learned this about this new president-- he's not doing this to enrich himself-- who would give up their regular life for president like he has?

--99.103.xxx.xxx




New tax law (by myob [GA]) Posted on: Jan 12, 2018 2:31 PM
Message:

David MI if nothing else i've learned this about this new president-- he's not doing this to enrich himself-- who would give up their regular life for president like he has?

--99.103.xxx.xxx




New tax law (by David [MI]) Posted on: Jan 12, 2018 5:59 PM
Message:

myob, BINGO. the new book reports that he never wanted to be president. It was all a publicity stunt. --50.4.xxx.x




New tax law (by nhsailmaker [NH]) Posted on: Jan 13, 2018 3:49 AM
Message:

David (MI) - if you believe anything in that book then I worry about your minds natural ability to be skeptical and you also may be lacking any ability to screen cow plop from your life. 2nd) If he didn't want to be president then why do you believe he colluded with the Russians to win the election? - Cant have it both ways --24.34.xx.xxx




New tax law (by Marv [IL]) Posted on: Jan 13, 2018 8:56 AM
Message:

Lets get back on track with new tax law. --173.15.xx.xxx




New tax law (by Robin [WI]) Posted on: Jan 13, 2018 10:39 AM
Message:

In John Hyre's webinar he made it very, very clear that rental properties ARE a business, except in very rare and unusual circumstances (i.e. a tenant that lives there for 15 years and handles all the maintenance themselves). It's just a business that is reported on a schedule E instead of a schedule C.

He agrees that we'll be able to take advantage of the 20% deduction ("a gift"). And while you can't depreciate the entire cost of the house immediately, you can depreciate any improvements on the LAND: driveway, landscaping, fence, deck, etc.

I'm thinking 2018 is the year we hire a CPA... --204.210.xxx.xxx




New tax law (by Ray-N-Pa [PA]) Posted on: Jan 13, 2018 4:52 PM
Message:

That was my take on it too Robin.

I was worried about active verse passive and it doesn't matter --24.101.xxx.xxx




New tax law (by NC INVESTOR [NC]) Posted on: Jan 14, 2018 9:37 AM
Message:

The IRS used to require that you spend 1200 hrs/year to be considered a business as opposed to a hobby. That was reduced to 750 hr/yr but that may have changed too.

The time spent is less important the fact that you must actively participate with the intent of producing of income. You do not have to make a profit as long as you have a profit motive.

--71.75.xx.xx




New tax law (by Marv [IL]) Posted on: Jan 15, 2018 5:43 AM
Message:

I remind you that the deduction is 20% of the PROFIT. If you have a loss in the current year, that is carried forward and netted with future gains. When you finally have a net profit, you can deduct the 20% (or whatever the current rate is). --173.15.xx.xxx




New tax law (by John... [MI]) Posted on: Jan 15, 2018 6:39 AM
Message:

I still think we have a "clear as mud" situation here. Like Marv said, the real question is about whether or not your rentals are a "business" to the IRS or not.

Some people are just going "Yes, of course it is a business! John Hyre told me so!" while others are going "Well, the IRS has requirements for a business -- such as the number of hours put in per year."

I just feel like some people are making huge assumptions/leaps based on a webinar that they listened to recently -- but where is the actual IRS guidelines or rules to back it up? Again, in the past, you couldn't just decide "I'm a business, I just happen to use a Schedule E instead of C." You had to meet the IRS requirements to qualify as a business. Now people seem to be throwing that out the window because they WANT to qualify -- not because the IRS necessarily says that they WOULD qualify.

Again, those saying "of course we're a business!" may be correct. But I don't think that is CLEAR yet.

- John...

--24.180.xxx.xxx




New tax law (by WMH [NC]) Posted on: Jan 15, 2018 8:35 AM
Message:

Found this: "Owning rental property qualifies as a business if you do it to earn a profit and work at it regularly, systematically, and continuously. (Alvary v. United States, 302 F.2d 790 (2d Cir. 1962).)"

I know it's not a definitive answer, but it's something! --50.82.xxx.xx




New tax law (by NC INVESTOR [NC]) Posted on: Jan 15, 2018 9:17 AM
Message:

JOHN:

My answer came directly from the IRS website defining a business or a trade. See their full definition below:

The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services. It is not limited to integrated aggregates of assets, activities, and goodwill that comprise businesses for purposes of certain other provisions of the Internal Revenue Code. Activities of producing or distributing goods or performing services from which gross income is derived do not lose their identity as trades or businesses merely because they are carried on within a larger framework of other activities that may, or may not, be related to the organization's exempt purposes. --71.75.xx.xx




New tax law (by David [MI]) Posted on: Jan 15, 2018 9:27 AM
Message:

Nhsailmaker, in order to maximize publicity, he needed to run as long as possible. He did not expect to win, but wanted to squeeze as much juice as possible.

The author had access to the wh and senior staff. It's laughable to think he would then make stuff up --172.56.xx.xxx




New tax law (by NC INVESTOR [NC]) Posted on: Jan 15, 2018 12:55 PM
Message:

A new book "It's Even Worse Than You Think What The Trump Administration is Doing To America" is due to be released tomorrow.

Should be an interesting read. --71.75.xx.xx




New tax law (by John Hyre [OH]) Posted on: Jan 15, 2018 2:06 PM
Message:

1) The definition of "Trade or business" does vary for different portions of the Code. It also varies for different types of businesses, say rentals vs. loans vs. stock trading. The courts can make up a brand new definition for Code Section 199A. Possible, not probable, and not what they normally do. They normally borrow from the more widely litigated areas of the law, such as "is a rental a T/B for purposes of Section 162 or 280A?"

2) IRS website is not law. In the cited instance, it is also not relevant. The pasted language is related to UBIT - very different wording in that statute (see "unrelated") than just T/B making the language very, very unlikely to apply to what we are discussing.

3.) There's a good bit of case law on this in different contexts and it all points in the same direction: It takes very little activity to have a T/B where rentals are concerned.

See:

Anderson, T. C. Memo. 1982-576

Curphey, 73 T.C. 766

Gilford, 201 F.2d 735

GRIER et al. v. UNITED STATES (1954), didn't have the full citation handy

Murtaugh, T.C. Memo. 1997-319 (1997)

ALVARY, 302 F.2d 790

IRS Letter Ruling 9840026

Revenue Ruling 73-522 (but different wording for that statute, which is why I think xxx lease issue is still grey, add that RR's are not "law")

I'll bet there are another 4 or 5 out there, all in the same vein.

Bottom line: Unless the courts break with their normal approach and make up a brand new definition for what is a T/B in a rental context, odds are very high that the existing & generous definition will be used.

--70.45.xx.xxx




New tax law (by Marv [IL]) Posted on: Jan 16, 2018 5:45 AM
Message:

John- You can site case law all you want but this is new law. We need more clarification on the new law from revenue rulings. They will be coming, we just have to wait. --173.15.xx.xxx




New tax law (by Hyre [OH]) Posted on: Jan 16, 2018 7:02 AM
Message:

Marv,

On this issue we will be waiting a while. And odds are very, very high that what I say is so. I'm the first to caveat myself when things are uncertain. There's uncertainty here....but not a lot in my educated opinion.

In the meantime? Use what information we do have, take the position most favorable to you within reason (and what "reason" we presently have points towards it being very easy to qualify rentals as a T/B), and wait for the Tax Court (and not the IRS) to rule otherwise (which I doubt they will do).

PS: Revenue Rulings are not law. They are indicative of what the IRS thinks is law. That's way lower on the food chain than Tax Court rulings - as it should be. When I like what a RR says, I use it. When I do not, I look for (or wait for) contrary rulings from the courts and dismiss the RR as "the mistaken opinion of the IRS".

John Hyre --70.45.xx.xxx



Click Here to send this discussion to a friend
Report discussion to Webmaster


Reply:
Subject: RE: New tax law
Your Name:
Your State:

Message:
New tax law
Would you like to be notified via email when somebody replies to this thread?
If so, you must include your valid email address here. Do not add your address more than once per thread/subject. By entering your email address here, you agree to receive notification from Mrlandlord.com every time anyone replies to "this" thread. You will receive response notifications for up to one week following the original post. Your email address will not be visible to readers.
Email Address: