The National Association of Realtors (NAR) call the new tax rule a Massive win for realtors. The new tax law sees a reduction of the corporate tax rate going from 35 percent to 20 percent. This new ruling will help realtors give better deals at better prices. Also, this is tax return time, so that means more money to spend on future homes.
The new tax law sees all real estate agents and brokers who are not employed, but operate as sole proprietors or owners of partnerships eligible for the new deduction, which can be as high as 20 percent. This includes incomes that exceed $157,000 for single filers or $315,000 for those filling under a joint return.
However, renter-real estate owners must follow these rules to claim their deduction. Only the income from a "trade or business" can qualify for the 20 percent write-off. The owners of these renter-real estates are required 250 hours per year on maintaining and repairing the property, collecting rent, paying expenses and conducting other usual landlord deeds.
This new rule will also help those individuals who were affected poorly by 1031 exchanges. This proposed regulation was released last August, and those who had exchanged one parcel for another were wrongly denied deduction eligibility. As a result, the US Treasury and the IRS recognized the initial ruling was misguided and corrected the policy in the final guidance.
"NAR maintained consistent and coordinated communication with Treasury and the IRS throughout this rule-making process," says Shannon McGahn, NAR senior vice president of government affairs. "The finalized ruling, which represents a tremendous win for real estate professionals across the country, is a direct result of that engagement. We are thrilled to see our members emerge from this process so favorably, and we thank Treasury and the IRS for all of their hard work in ensuring consistency and clarity within these policies as America's 1.3 million Realtors begin filing their 2018 tax returns in the coming weeks."
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