- New 20% Tax-Free Treatment
- Safe-Harbor Rules
- Opportunity Zones
- Paying Towards Retirement
Under the new tax reform, wholesalers, flippers, syndicators, real estate brokers, and real estate agents may all be eligible for a new 20% tax-free treatment. For example, if you have eligible taxable income of $1000, the first 20% of it ($200) may be completely tax-free. You would only pay taxes on the remaining $800. This will be a big saving. Be sure to utilize it. Details please see IRS Code Section 199A.
What hat about landlords and investors of short-term rentals? What about investors doing buy-rehab-rent-refinance? Those income potentially also have the ability to receive a 20% tax-free treatment. The IRS came out with some safe-harbor rules on what need to do in order to obtain that benefit. Check out IRS Code for more information.
Are you looking to sell your appreciated rental property but face capital gains taxes? Or are you looking to move money to real estate? Instead of paying taxes on the capital gains, you now have an “opportunity” with the brand-new Opportunity Zone laws to defer taxes on the gain.
Re-invest your capital gains within 180 days of the sale into qualified Opportunity Zone funds to defer your taxes. After holding onto the Opportunity Zone asset for five years, part of your deferred gain may to be permanently tax-free. Moreover, if you hold your investment for more than 10 years, 100 percent of the post-acquisition gain on the Opportunity Zone property may be permanently tax-free.
Please feel free to call us on whether a property is in an Opportunity Zone in Ohio. You should not miss this great opportunity.
Before the end of the year, make sure you talk with us or your tax advisor on ways to pay towards your retirement rather than to pay the IRS. You may be able to contribute up to $56K to reduce your tax bill and have that money grow for you tax-deferred in real estate assets. The best type of retirement account and the maximum amount you can contribute will depend on a few factors. Make sure to have a complete strategy before filing your taxes.
It is often said, it’s not just about how much money you make – it’s about how much of it you get to keep. Contact us for your real estate and wealth management questions.
Attorney Lei Jiang holds a US JD degree and studied LLM in US Taxation. She has been practicing real estate and business law since 2009 and since helped numerous real estate investors in all aspects of their ventures. Call (440) 835-2271 for consultation.
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