Trump Tax Plan - Calling All You Tax Gurus

[John McAuley]

I haven't seen another post about it so I thought I would start one.  I've read the 9 page tax plan summary.  Although very vague, it provides a framework for what they are going after and mentions several things I thought could have significant impact on real estate investors.  I'm primarily a long term buy and hold investor who is not a tax guy by any means, but loves tax strategy.  So I thought I would ask you all to weigh in.  I'll start with a few points.

1) Mortgage interest deduction.  Raising the standard deduction will virtually eliminate the need to claim the mortgage deduction for many homeowners.  This is why the National Realtor Association is mad.  But as a real estate investor, would this really have much impact?  For rental property, is mortgage interest actually deducted as a normal expense like any other loan or is it leveraging the mortgage interest deduction?  The reason I ask is because many speculate that raising the standard deduction is just a baby step towards eliminating the mortgage interest deduction later....if most people aren't benefiting from it they won't notice when it is gone....goes the logic.

2) Corporate tax rate reduction.  Seems like this could be very good for different business types.  Again, I'm not a tax guy, but if the corporate tax rate gets lowered to 20%, would it make sense to move all flipping activity into a corporation?  For people with high W2 income, where flipping (or any active business activity) gets added right on top of their current income, 20% is a whole lot better than 33% or 35%.

3) I saw some wording about not allowing interest expenses for corporations, or restructuring it...or something.  I'm not exactly sure what the impact of that would be.  It sounds like it could impact the ability to write off interest on loans.  Could this impact the interest write off as mentioned earlier?

OK, that's it.  Sorry if this has already been posted so just delete it if there is already another thread going on about this subject.  I just couldn't find it.  Thanks.

[Dan Vleck]

I think it is time to talk about this and speculate.  If we understood the implications of these tax proposals, we'd be more apt to get involved politically by contacting our legislators and expressing our interests. 

It might be advantageous to pay off houses rather than buying more if the tax structure changes...