The Tax Cuts and Jobs Act of 2018 (TCJA) had an impact on a number of industries. This included the rules for Real Estate investors, Brokers (Both of which I’ll cover at a later date) as well as Real Estate Agents in the Richardson, TX area and nationwide, which I’ll cover today.
Impact on Homeowners
On a more general level, here are some of the tax changes that may impact your potential clients in the market for real estate
- Limitation of State and Local income Tax and Property Tax of $10,000
Mortgage Interest Changes for Debt incurred after December 15th, 2017
- Reduced Limit to first $750,000 of Debt for the Mortgage Interest Deduction.
- Changes to the Deduction of Home Equity Debt
- Investment Real Estate has NO Mortgage Interest or Real Estate Tax Limitations, Expansion of Secction 179 and Bonus Depreciation Deductions for Improvements and new Loss Disallowance Rules
Impact on Realtors Personal Returns
Since most Realtors are classified as Independent Contractors or Statutory Nonemployees for tax purposes, they file as a sole proprietorship on Schedule C. Here are some of the changes that Realtors will see this year on their own returns. This is not by any means all of the changes in the law but it is some of the higher profile changes. As a Schedule C filer, always remember to make your Estimated Tax payments timely each quarte
- Overall Reduction in Income Tax Rate
- Increase in Standard Exemption and completion removal of exemptions. The impact on you can go in either direction, and how it impacts you, will probably be driven by whether you typically itemize deductions and the size of your family.
- Increase in Child Tax Credit to up to $2,000 Availability of an Other Dependent Credit of up to $500 that can be used for children over 16 years of age as well as other qualifying dependents
- A variety of changes to itemized deductions including those noted above.
- As a sole proprietor and Schedule C business, realtors could be eligible for the new QBI deduction of up to 20% of income.
Do you Need Help?
Make sure you understand how the TCJA impacts you directly and that you communicate properly to your clients. At Bob Jablonsky and Associates, we specialize in taxation for the Real Estate Industry. If you are in or near Richardson, TX and need help, feel free to contact Bob Jablonsky at (972) 821-1991 or at firstname.lastname@example.org. To learn more about us, please visit our website at https://jablonskyandassociates.com.