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Section 199A Deduction

Mar 27, 2018

Why it's important:

  • 20% deduction on flow-through income including rental income
  • Reduces tax rate on income from top bracket from 37% to 29.6%


Ken Weissenberg:

199 Capital A Deduction, which is a 20% deduction on flow through income, which includes rental real estate income.

It's a major deduction that reduces the tax rate on income for the top bracket of 37% down to 29.6% - major giveaway. That also applies to REIT dividends and a publicly traded partnership income.

Bonus Depreciation Increase

Provision for Losses Limit

Real Estate professionals can still deduct losses against income and losses now being limited to $500,000 per year are downsides to the Tax Act. If you're a real estate professional you get to deduct your losses against any other types of income.

Interest Deductibility

New limits impacting tax planning include deductions for interest limited to 30% of income before interest, taxes and depreciation and real Estate companies can elect out by lengthening depreciation for assets.

Rising Trends

What's on the Real Estate horizon due to the Tax Act? Transactions with REITs will be much more popular, as well as CAP A deductions, investment expense deductions and depreciation as a result of the tax act.

What's on Your Mind?

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Kenneth Weissenberg

Kenneth Weissenberg CPA, Tax Partner in Real Estate Services, is experienced in tax saving strategies and negotiating sales and acquisitions. He represents owners of some of the most well-known real estate properties in New York City.

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