Treating Your Home as Rental Property: A Way Around the State and Local Tax Deduction Limit?
One of the more controversial aspects of the Tax Cuts and Jobs Act (TCJA), passed in December 2017, was the introduction of a $10,000 cumulative limit to personal tax deductions available for state and local sales, income, property and real estate taxes paid. This represents a huge tax hit for the average taxpayer, particularly those in states with higher than average income tax rates. It’s important to note this limitation only relates to personal expenses and not business expenses.
Converting Personal Tax Payments to Business Expenses
As you can imagine, this new law has inspired some creative tax planning. All of a sudden, taxpayers have an incentive to convert their personal tax payments to business expenses. To avoid running into the $10,000 limitation for real estate taxes, taxpayers are beginning to ask questions such as, Can I turn my home into a business asset by transferring it to an LLC, which I control, and renting it from the LLC?
Find out if treating your home as a rental property will work.
The post Real Estate and Construction Newsletter August 2018 appeared first on Anders CPAs.