NIIT Picking

The Net Investment Income Tax Real Estate Pros may be liable for the NIIT. The NIIT, or Net Investment Income Tax, is a 3.8% levy on passive investment income for certain high-income taxpayers. However, the IRS gives Real Estate Pros an exemption from this additional tax. The NIIT doesn’t apply to a real estate pro’s…

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SHORT TERM RENTALS TAXATION (Airbnb, VRBO, HomeAway, etc.)

Special and complex taxation rules can make the rents that you charge self-employment income. These short-term rentals are reported as business income on a Schedule C, as opposed to a rental activity reported on Schedule E. Therefore, net income is subject to the dreaded SE tax. Executive Summary: Properties Rented for Fewer than 15 Days…

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Owning Real Estate in Mexico

Have you ever thought of owning your own piece of Mexico? Or have you given any thought to retiring to our neighbor to the south? While on my trip to Mexico I decided to research both ideas. This article focuses on acquiring property in Mexico. Years ago, Mexico decided to protect its highly sought-after coastlands…

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Tax Planning Tidbits

Individual federal income tax rates don’t appear to be increasing next year except for taxpayers with adjusted gross incomes over $10 million. Also, the estate tax stepped-up basis rules for inherited property are not expected to change. Make the most of your charitable giving by donating appreciated property. Stocks, mutual funds, or real estate, that…

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Retirement Plans

Traditional and Roth IRAs Max contribution $6k or $7k for those 50 or over. Best for individuals with modest ability to save for retirement. SIMPLE IRA Max contribution $13,500 or $16,500 for those 50 or older. Best for Midsize businesses with up to 100 employees SEP IRA Max contribution $58k Best for business owners with…

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Wanna Deduct All Your Rental Losses?

Then You Better Study and Pass all Your Tests Generally, passive (rental) losses are ONLY deductible against income that you do not materially participate in, i.e., passive activity income. Losses that exceed your passive activity income are carried forward to the next year (indefinitely or until the related property is sold). However, Real Estate Professionals…

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Tax provisions in the Build Back Better Act

I have selected 15 provisions that will affect many of my clients. Basically, I find the bill to be extremely flawed. However, there are a few provisions I support, but very few. Let me hear from you on what you think. One year extension of expanded child tax credit; permanent extension of refundability. I am…

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What’s going on in the Estate and Gift Tax Arena?

Magic Show or Circus Act? Primer: The estate tax is imposed on bequests at death as well as inter-vivos (during life) gifts. A certain amount of each estate is exempted from taxation by the federal government. The exemption applies to total bequests and gifts (not including the annual gift exemption of $15,000 per year per…

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Real Estate Market Update

You know that investing in real estate is one of the best ways to increase your net worth. For most Americans, real estate equity is the largest source of their wealth. But with the market at all time highs, should you buy real estate now? Many experts believe that the real estate market will not…

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Real Estate Loss Deductions

Taxpayers who are not actively involved in their real estate rentals cannot deduct their losses against other income. However, taxpayers who are actively involved in their rental endeavors may be able to deduct some or all their losses. These taxpayers are limited to deducting $25,000 or less of their rental losses against other income. Taxpayers…

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