Deducting Interest in 2018?

[Eric Sender]

I am a CA resident looking to start REI, most likely as a sole-proprietor at first. I am expecting that all my expenses concerning the investment, such as interest, will be a write off from my REI income. In fact I have a few questions.

Under the new tax plan, can I:

• Write off interest from my profits?
• Takes profits as a pass-through at the new 20% tax rate?
• Fund my real-estate directly through my personal funds?
  • Assuming I run the REI as a sole proprietor
• If I run the REI through an LLC, can I still fund the LLC directly through my personal checking account?

I believe with the $24,000 standard deduction as well as ending the state tax deduction, I most likely will not be about to write off a personal mortgage, however I am wondering what changes for mortgages for my REI?

I'd appreciate any explanations or clarifications. I am under the assumption Trump's tax plan will actually help REI, I'm just not sure about the nuances.

[Lance Lvovsky]

Consult with a CPA to help you navigate the new tax laws.

Generally speaking, mortgage interest on rentals can be deducted in full (subject to interest tracing rules). Most real estate investors would generally get the benefit of the 20% deduction on the pass through income.

An LLC should always be funded (capitalized) by the members/owners of the LLC. If you are the 100% owner of your LLC, then yes you can fund the LLC from your personal account.