During the last decade, limited liability companies ("LLCs") have become one of the most preferred forms of business entities through which to hold title to investment real estate properties. Prior to LLCs, real estate investors seeking limited liability protection were largely limited to using corporations to acquire title — a form of entity that has potential drawbacks.
If you’ve invested in a trade or business in which you don’t materially participate, remember the passive activity rules. Why? Passive activity income may be subject to the NIIT, and passive activity losses generally are deductible only against income from other passive activities. You can carry forward disallowed losses to the following year, subject to the same limits.
Factors to consider when purchasing property
Even though today’s real estate market has improved, you can still find investment properties at bargain prices. But, as with any real estate investment, the price may be too good to be true. Therefore, you’ll need to consider more than just the purchase price.
Could you use a tax strategy that can save you significant tax dollars and boost cash flow? If so—and who doesn’t want to save tax?—consider looking into a cost segregation study on the dealership real estate you own. It could save you a bundle.
Lease options are often used in real estate transactions, especially when property owners run into difficulty finding a buyer. If you’re not careful, though, the IRS might recharacterize the arrangement as a sale in the form of a contract for deed.
Topics: Real Estate
Do you ever work from home?
If your use of a home office is for your employer’s benefit and it’s the only use of the space, you generally can deduct a portion of your mortgage interest, property taxes, insurance, utilities and certain other expenses. Further, you can take a deduction for the depreciation allocable to the portion of your home used for the office. Note that you will recover the cost when you sell your home, so you should be sure to keep track of any depreciation taken. You can also deduct direct expenses, such as a business-only phone line and office supplies.
The 3.8 percent net investment income tax (“NIIT”) under the Affordable Care Act (“ACA”) has been in effect since 2013 and remains in effect for tax year 2015 and beyond. The taxpayer is liable for NIIT on the lesser of their net investment income (“NII”), or the amount by which their modified adjusted gross income (“MAGI”) exceeds the threshold based on filing status.
Effective January 1, 2016, Brad Gross, Partner, and Shea Kracheck, Principal, at Lane Gorman Trubitt, PLLC (“LGT”), have become board members of local organizations. Gross joins the 2016 TEXO board, a Dallas/Fort Worth local collaboration of two national construction industry organizations, and Kracheck accepted a board role at the Commercial Real Estate for Women’s Dallas Chapter (“CREW Dallas”).
With estate, gift and generation-skipping transfer ("GST") tax exemptions at record-high levels, far fewer taxpayers need to worry about being subject to these taxes. But Congress could still pass legislation at any time making estate tax law changes—and not necessarily for the better. So whether or not you’d be subject to estate taxes under the current exemptions, it’s a good idea to consider whether you can seize opportunities to potentially lock in tax savings today. Those same opportunities might not be available in the future.