New Tax Law May Encourage Home Rentals

[Raj Sid]

https://www.wsj.com/articles/new-tax-law-may-encou...

https://www.cnbc.com/2018/02/02/a-big-tax-break-co...

How of this is applicable for rental property, if you are renting the whole house? Does this mean 20% of profit from rental is no longer taxable, provide you have it under a LLC.,?

Thanks

[Raj Sid]

Originally posted by @Ashish Acharya:

@Raj Sid

Yes, a Rental activity may qualify for the 20% deduction.

If your rental activity is qualified for 20% deduction, it does not have to be in an LLC.

Rental income without LLC  also qualifies for 20% deduction ( if your rental qualifies- not all rental might qualify). Activity has to be a trade or business. We are still waiting for a clear guidance from IRS on this 199A ( 20% deduction). Expected to come out soon. 

Generally, rental activity is not trade or business. But the court has gone both directions. Treating just one rental as a trade or business and treating multiple rentals as not a trade or business. So, with right planning we are hopeful that 20% can be taken on the rental net income. 

Bottomline, you dont need LLC. 20% deduction is also for a sole prop.

The article you are mentioning is short term rentals, that will normally qualify for trade or business. 

How does this apply when your real estate activity is only passive, not active. Should I be looking at LLC.,?