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Tag Archives: rental property owners

Can Small Rental Property Owners use the New IRS 20% Pass-Through Tax Deduction? By – Gideon Kramer

Posted on 01. Apr, 2019 by .

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Among the most notable elements of the Tax Cuts and Jobs Act of 2017 is a new deduction for pass-through businesses. A pass-through business, (about 95% of U.S. businesses are pass-throughs), is one that does not pay corporate income tax. Starting in 2018 and continuing through 2025, qualifying pass-through business owners can deduct from their income taxes up to 20% of their net business income. This includes most residential landlords who own their rental property as sole proprietors, LLCs, or partnerships.

With these entities, any profit earned from the rental activity is “passed through” to the owner or owners’ individual tax returns, and they pay tax on it at their individual income tax rates. To qualify, total taxable income for the year from all sources after deductions must be below $315,000 for married couples or joint filers, or $157,500 for single taxpayers.

Do You Qualify?

Real estate rental activities, such as property management engaged in by many small property owners, can qualify for the pass-through deduction. However, they must qualify as a business for tax purposes of the deduction IRS regulations provide that determining whether an activity qualifies as a business for purposes of the pass-through deduction is done under the general rules applicable to all businesses for all tax purposes: an “activity” is a business if the owner engages in the business regularly, continuously, and systematically to make a profit. Some tax experts question whether a rental property owner who owns only a few units, or only one, is “in business.” Previous tax court cases have held that ownership of a single rental property can be a business on its own if it’s not extremely passive. The IRS has agreed single rental property doesn’t always constitute a business; it depends on the circumstances.

Conclusion

The Tax Cut and Jobs Act is extremely complex tax legislation that leaves many questions unanswered. The information above does not constitute tax advice; as with any tax matter, consult with a qualified tax preparer to determine if your rental property and your activities related to it qualify for the deduction.

Gideon Kramer is the News Editor of the Small Property Owners Association of San Francisco.

Reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News.  For more information on becoming a member of SPOSFI or to send a tax-deductible donation, please visit their website at www.smallprop.org or call (415) 647-2419.

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Mold and Rental Properties – by Rick Bruce

Posted on 01. Aug, 2018 by .

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Over the past few years, one of the problems that seem to have taken on increased importance for property managers is mold. When a property is suspected to have a mold problem, this becomes a potential health issue for the tenants, but it also becomes a potential liability issue for the property owners or managers. Mold is not a new problem, and many scholars believe that some biblical references in the Old Testament (including some of the ten plagues of ancient Egypt), actually refer to mold-related problems.  […]

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None of Our Politicians Has the Courage to Do the Right Thing for Owners and Renters – By Noni Richen

Posted on 01. Dec, 2016 by .

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In what must have been one of the low points of her day, a young woman recently knocked on my door to tell me that she was from the San Francisco Tenants Union and wanted to invite me to a “Town Hall” to listen to Dean Preston, a supervisorial candidate talk to tenants about how unfairly they are being treated and how they should demand their rights. […]

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Legal Q & A – by Dennis Block

Posted on 01. Dec, 2016 by .

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Question One:  We attended your seminar on Tenant Screening at the L.A. Convention Center as we are members of the AOA. Thank you very much for your seminar which gave us highly useful tips to screen probable tenants. I will be glad to use your services for us and for my friends because of your professionalism.

We have a situation now where we received an application from a company to rent our single family house in Long Beach. We heard in your talk that when renting to a company, be careful because there are some risks involved. Can you please give us clues as to what we need to look for and what we need to avoid from corporate tenants in renting our property. We appreciate your assistance in this matter. Thanks a lot. […]

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HELP STOP THE TRASH MONOPOLY! – By David Hernandez

Posted on 01. Dec, 2016 by .

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Apartment Owners, Business Owners and Community Leaders

Are Fighting Back to Protect Your Rights and Your Wallets!

In 2014 the Los Angeles City Council and Mayor, working with Labor Based Organizations passed an Ordinance impacting all commercial business, including apartment owners, in Los Angeles.

While the city picks up trash from residential and some smaller apartment units, commercial business owners were able to negotiate with the approximately 30-40 commercial trash pick-up providers for their commercial trash service. “The best service for the best price was the standard policy in Los Angeles for apartment owners.” […]

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Still the Biggest Pitfall of a Family Living Trust Lawsuit – By Dale Alberstone, Esq.

Posted on 01. Dec, 2016 by .

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As I advised AOA members in this column five years ago, the biggest pitfall in any arbitration or litigation, including unlawful detainers, brought or defended by a family living trust is the failure of the pleadings to properly identify the trustees of the trust as parties to the proceeding.  […]

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10 Ways to Be a Great Landlord – By Richard Montgomery

Posted on 01. Nov, 2016 by .

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It is upsetting when we get tenant complaints as a landlord. It is hard work renting apartments or homes to tenants and it takes people skills and management skills. Many times our goal as a landlord is to simply avoid tenant complaints. But there are principles, if properly used, that can reduce or eliminate tenant complaints. Do you know what it takes to be a great landlord? […]

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Do You Have a Written Qualification Criteria List for Applicants? By Patricia A. Harris

Posted on 01. Nov, 2016 by .

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Having a written criteria list for your rental applicants is pertinent in your rental business and serves several purposes.  By attaching a copy of your rental criteria to each blank application form, you are informing your applicant of a list of conditions that must be met for them to be considered as a future tenant in your building. […]

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Roof Coatings Are Not Roofs! – By Tom Scherer

Posted on 01. Nov, 2016 by .

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Roof coatings became popular in the 1970’s and 80’s, along with the “Bee Gees”, and they have been around ever since. Coatings are applied over an existing hot tar roof in an effort to “extend” the life of the roof and to add reflective qualities to the system. This is sound thinking, however, in many cases, coatings are misrepresented by the coating industry and contractors who install them. Most of the waterproofing is done before the coating is even applied. (All cracks and holes are mended with plastic roof cement.) […]

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What Time Records Must a Resident Manager Keep? – By Dale Alberstone, Esq.

Posted on 01. Nov, 2016 by .

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Hello everybody.  Regular AOA readers of this column know that my most passionate recommendation to owners and management companies who employ resident managers is have their managers sign a written employment agreement setting forth the terms and conditions of the hiring. […]

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