- 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.
Lei Jiang LLC 2019 . All rights reserved.
New tax reforms changed real estate investors’ tax strategies in 2019. As a real estate attorney with extensive tax training, a broker, and an investor, I want to share some of the tax strategies you should know for 2019 tax.
- Deducting Interest Expenses
- Investment-Specific Interest and Taxes
- Bonus Depreciation
Deductions are not only rental related expenses like interest, taxes, management fees, but also include many overlooked legitimate deductions that are not property specific. Examples of commonly missed deductions are business related car expenses, business travel costs, business meals, education expenses, membership costs, real estate books, and home office. These expenses can add up during year and can help you save big tax dollars.
Under the new tax reform, interest related to home equity line of credit (HELOC) on the primary homes are no longer deductible. However, if you took out a primary home HELOC and used that money for real estate investments, you can still deduct the interest against the rental income or flip income. Make sure you inform your tax preparer/accountant about it.
Tax reform also places a new limitation on how much can be deducted for property taxes and mortgage interest on our primary homes. But these limitations do not apply to real estate investments. Therefore, be sure to talk to your tax preparer about it. Whether you are a landlord or flipper, you can generally fully deduct the interest and taxes for your investment properties.
On the up side, tax reform provided us with 100 percent bonus depreciation in 2019. So, if you are a real estate investor who is buying appliances, furniture, equipment, laptops, and other assets for your real estate business, you may be able to write off up to 100 percent of those costs immediately rather than depreciate them over many years. Moreover, bonus depreciation strategy can be used with or without a legal entity, and it can be used with new or used assets.
—To be continued.
Attorney Lei Jiang holds a US JD degree and studied LLM in US Taxation. She has been practicing real estate law since 2009 and helped real estate investors in all aspects of their ventures. Call (440) 835-2271 for consultation.
Lei Jiang LLC, 2019. All rights reserved.
One more successful trial was conducted by attorneys in Lei Jiang Law Firm. Attorney Jiang was the lead counsel. He, et al. v. Rom, et al., Case No. 1:15-CV-01869, was initially filed as a class action in the U.S. District Court for Northern District of Ohio. Three Plaintiffs represented a class of 140 people against eight individual and corporate defendants. Class action, international parties, service issues, taking evidence under Hague Convention, and electronic discovery all render this case one of the most complex cases. But we see it as an opportunity to establish ourselves in the global litigation and advanced dispute resolution arena.
Electronic discovery presented a unique challenge in this case. Our firm represented Plaintiffs and were dumped with 86 gigabyte (GB) of electronic stored information (ESI) after a successful motion to compel filed by us. The dumping was just one month before the discovery cut off deadline. Considering that 1GB typically contains 64,782 pages of documents (more pages for email files). 86 GB contains an enormous amount of documents for review. Yet, we swiftly employed a comprehensive strategy, utilized latest software and platform, and conducted document review in the most effective and efficient manner. Our team, attorneys and computer forensic expert, worked diligently on the data. As a result, the relevant information was quickly extracted for litigation. We were able to review a large amount of information within a relatively short period of time.
Although Plaintiffs’ effort in class certification failed, the final result was a success. The case proceeded to the trial. Four day trial resulted a complete victory for our clients. Plaintiffs prevailed on all claims submitted to the jury, including fraud and violation of Ohio Deceptive Trade Practice Action. Plaintiffs also successfully pierced corporate veils of all remaining corporate defendants – make their owner personally liable for the corporate misconduct. Finally, Plaintiffs were awarded with punitive damage and attorney fee. This is a stunning victory for Plaintiffs, considering fraud, piercing the corporate veil, and seeking punitive damage were the most difficult tasks in any lawsuit.
In this case, we also utilized new technology for virtual remote deposition and contemporaneous transmission of trial testimony from the other side of the globe – Hong Kong. The new technology we used was tested first time in the Northern District of Ohio. It significantly reduced the cost, and eased restrictions on time, place, facility and equipment. In this case, legal expertise and technologies were worked together seamlessly.
It must be mentioned that Plaintiffs were lucky to have the case be heard in the court of honorable Judge James Gwin. Judge Gwin took no shortcuts, made no detours, and in this case, he made the full journey necessary to accomplish justice.
If you or your company need a competent law firm to handle international disputes or litigation, please contact us.
On August 23, 2015, Ms. Zheng and several others, as representatives of a class, filed a class action at U.S. District Court Northern District of Ohio against the biggest online real estate investment portal in China SouFun Holding Ltd. and SouFun International Ltd.
The complaint alleged fraud, violation of Ohio Deceptive Trade Practice Act, violation of Ohio Consumer Sales Practice Law, violation of Ohio real estate law, unjust enrichment, and breach of fiduciary duty. Lei Jiang Law Firm represents Plaintiffs and the class.
Since this is a case involving international parties, the service was a challenge because it must go through Hague Convention service of process. Plaintiffs successfully perfected the service through Hague Convention.
Major Chinese media in China and U.S. have reported this case. The case is closely watched by many due to the ever increasing trend of Chinese investing in U.S. and global real estate.
For report from the People’s Daily, the official media, click here.
Reports from the biggest Chinese media (in Chinese) QQ, Sina, SOHU, NETEASE.
Reports from the biggest U.S. Chinese media (in Chinese) USChinaPress， 中金在线.