Rising Trends
- Published
- Mar 27, 2018
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What's on the Real Estate horizon due to the Tax Act?
- Transactions with REITs will be much more popular
Transcript
EisnerAmper Team:
During transactions, using REITS is going to become much more popular under this law. Certain items of income which on a flow through basis would not be subject to the 20% deduction, would be subject if they’re held through a REIT. This would include income that qualifies as good REIT income such as, mortgage interest and income from property that is not subject to depreciation, like the Brown-List.
So, if that income is earned directly it's subject to the top bracket, at 37%. And certain expenses and carrying on those activities, which would normally be treated as investment expenses, wouldn't be deductible for individuals. If it's income earned by a REIT, one, your net owner's expenses against that income so you get the benefit of the deductions and, two, the income is subject to the 20% discount for tax based on the 199 Cap A Deduction. So REITs are going to become much more popular in planning going forward.
Section 199A Deduction
Bonus Depreciation Increase
Provision for Losses Limit
Interest Deductibility
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