The recently-enacted tax law changes are substantial, and are already greatly affecting all areas of industry, real estate included. Briefly …
For the Residential Market: The mortgage interest deduction has been lowered. State and local tax deductions, which include property taxes, have been capped. And the deduction for moving expenses has been eliminated for virtually everyone other than military personnel.
For the Commercial Market: With new rules allowing taxpayers to take deductions for 20% of income from pass-through businesses, there is a major opportunity to boost savings by investing in real estate through a pass-through entity such as an LLC. Real estate investments are much more attractive now, as a result of the elimination of the 1031 exchange treatment for non-real estate assets (such as art or automobiles). And a new, three-year holding period under IRC Section 1061 may create havoc for new and existing developments.
These short summaries represent just a small fraction of the relevant revisions to our tax laws brought about by the Tax Cuts and Jobs Act of 2017. As your clients plan their next residential or commercial sale or purchase, it is imperative for you to be aware of the changes – and the consequences – so that you can better guide them through the complexities.
At Erwin Law, we make it our business to know the ins and outs of these issues, and can help you protect your clients from — or take advantage of — these significant developments. If you are looking for a trusted partner to rely on, visit us at http://erwinlawfirm.com or call us at (773) 525-0153.