Rentals and Opportunity Zones – DAVID RANDOLPH

Rentals and Opportunity Zones

I previously wrote about my Sept 2018 STLREIA Presentation of the new 2018 Tax laws and how they affect your real estate business (rehabs, rentals, wholesales, Realtors etc) or any other small business? These laws are in effect for a number of years so you should be implementing these in your small real estate business NOW to make sure you get the section 199A 20% reduction right off the top in your trade or business income (you do know what that is right?).

Just so you know, the IRS had made it official in IRS notice 2018-76. The IRS states that: “client and prospect business meals continue as tax deductions under the Tax Cuts and Jobs Acts.

The caveat though is separating meal expense from entertainment expense. Entertainment is NOT deductible. So in that situation , you need to have a separate expense record for the amount spent on the food. So if you go see a dinner play/movie, you will need some itemization for how much the cost for the food was but not for seeing the play or movie.

If you would like to know more get my 54 Slides, and to watch the video at no cost, then please message me your email and contact info. Make sure your 2019 was done right.

On June 17th, 2019 meeting, the STLREIA, in St. Louis had a speaker addressing the 2018 new depreciation rules/cost segregation rules. That is a whole topic by itself and these are the important points I got out of it:

1. A Catchup benefit that you may have missed. Form 3115 (just ask your accountant). You can do for past 6 years. Change from straight line depreciation to Accelerated depreciation.

2. You do not have to recapture taxes on the Personal property when you sell a rental house. What you do is state in the purchase sale contract that the personal property sold for a loss.

3. Opportunity Zones. Yes right here in St. Louis (and in other Cities). Use this website to zoom in on St. Louis:

https://www.cims.cdfifund.gov/preparation/?config=config_nmtc.xml

4. Opportunity Zone: You never pay capital gains tax if you hold the property for 10 years, you can trade any other type of investment for an Opportunity zone investment. Whereas 1031 requires real estate for real estate.

5. Opportunity Zone: NO intermediary required whereas a 1031 exchange requires an intermediary.

David Randolph

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