Mark B. Kravitz Esq.
ONE | Sotheby’s International Realty
Tax Cuts and Jobs Act is no doubt complicated but is also not without opportunities for financial gain. Taking the time to educate yourself and understand how the new tax breaks will affect your real estate investments will be invaluable in making smart decisions come tax time.
Bonus Depreciation for Business Owners and Real Estate Investors
This depreciation deduction is one of the new opportunities offered by the TCJA. The break allows investors and property buyers to take advantage of a 100% first-year bonus depreciation deduction on a variety of real estate improvements, from HVAC to new alarm systems to roofing. Available until 2022, this is a great opportunity to take advantage of now.
Reduced Corporate Taxes
The corporate income tax rate has dropped to just 21%, down from the previous rate of 35%. Along with reinvestment rates now going as low as 8%, this big change has made it more desirable for big business to invest money back in the US and boost the market for everyone. New and expanding real estate startups will also see incentives, including a 20% deduction on qualified income for organizations like LLCs on pass-through income.
Your ability to restructure your real estate investment portfolios while deferring a tax hit has been protected with the new laws. This means now might be the ideal time to expand or change your portfolio to both avoid an immediate tax impact and prepare for bigger returns in the future.
Retirement Account Investments and Contributions
Contributions to long-term savings and investments, including 401(K) plans and Education Savings Accounts will still provide a reduction to your taxable income. With these important benefits protected in the new tax law, now is a great time to consider using long-term savings and self-directed retirement to invest into real estate.