I was reading an article today and thought I would share this with everyone as I found it to be very interesting .This News brief was seems to be a big win . Please read and let me know what your opinions are .. Be sure to read the IRS summery at the end .
Big win for Realtors®: IRS’s guidance on pass-through income
The IRS released proposed regulations on the new 20 percent business income deduction for pass-through businesses. The deduction was part of the big tax law Congress passed at the end of last year, and it was a huge win for Realtors®. But it was unclear who would be eligible for the deduction. Now that proposed regulations are out, it’s clear the new deduction will be available to a wide range of real estate professionals.
Under the new law, individual owners of sole proprietorships, including independent contractors, and owners of S corporations, LLCs or partnerships can take the 20 percent deduction on their net qualified (that is, ordinary, non-investment) business income. The calculation will depend on income thresholds, what type of business you own, and how you meet certain wage and qualified property tests. But the basic structure is very favorable to you as a small business or independent contractor. Realtors® were integral to the favorable interpretation in the proposed rules.
The national association made a forceful case—both in a detailed letter it sent in June and in a face-to-face meeting with IRS officials in early August—that certain limitations on specified service businesses were not intended by Congress to apply to real estate professionals. And that’s the interpretation the IRS has ended up taking. The new deduction is available for tax years beginning after Dec. 31, 2017. You’ll be able to claim it for the first time on the 2018 federal income tax return you file next year. Look for detailed NAR guidance by mid-September. It’s a complicated provision and how it works for you will depend on many factors unique to your business structure and your income. As always, consult with your accountant or tax attorney on how this deduction should be applied in your situation. Read the IRS summary with link to FAQ here.
Source: Nar.realtor; 8/9/2018
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