Business Credit Tax Tip

With last year’s change in the Tax laws, a new business credit was introduced to level the playing field between the corporate tax rate reduction and the tax rates of pass-through entities. The new section 199a deduction afforded to pass-through entities a new 20% tax credit. This will be of particular interest to Landlords. On January 18th the IRS clarified many of the questions regarding this credit for rentals and created new safe harbor rules. These new safe harbor rules go in effect beginning with the tax year 2019. Solely for the purpose of this credit, the IRS will treat rental real estate as a trade or business if certain requirements are met. Contact your tax professional to get all the details on these new record-keeping requirements. You may also be able to use this new credit on your 2018 return as long as you were actively involved in the operation of your rental real estate. Your Tax Adviser will be able to guide you on whether you qualify. You may also be eligible to use this credit on other business income as well. It’s a complicated new development but well worth the effort of checking into.