The Internal Revenue Service has issued final rules on the 20 percent business income deduction (Sec. 199A of the Tax Code) that was enacted in late 2017 as part of the Tax Cuts and Jobs Act.
Among other things, the rules confirm that the deduction applies to your business income, as a real estate agent or broker, if you operate as a sole proprietor or owner of a partnership, S corporation, or limited liability company. It applies even if your income exceeds a threshold set in the law of $157,500 for single filers and $315,000 for joint filers.
In addition, the rules provide guidance that NAR has been seeking on two other provisions of importance to you: 1) whether any real estate rental income you have is eligible for the deduction, and 2) how the deduction applies to properties you’ve exchanged under Sec. 1031 of the tax code.
Eligibility of rental income
If you generate rental property income, that income can also qualify for the new deduction, as long as you can show that your rental operation is part of a trade or business. The IRS has released proposed guidelines that include a bright-line test, or safe harbor, for showing that your rental income rises to the level of a trade or business. Under that safe harbor, you can claim the deduction if your rental activities—which include maintaining and repairing property, collecting rent, paying expenses, and conducting other typical landlord activities—total at least 250 hours a year. If your activity totals less than that, you can still try to take the deduction, but you’ll have to be prepared to show the IRS that your activity is part of a trade or business.
Eligibility of 1031 like-kind exchanges
Under earlier proposed regulations, if your income was above threshold levels set in the tax law—$157,500 for single filers, $315,000, for joint filers—and you had exchanged one property for another to defer taxes under Sec. 1031 of the tax code, the amount of the new deduction might be reduced because of the swap. NAR and other trade groups reached out to the IRS to change this treatment, and the IRS has made that change. Under the final rules, you can use the unadjusted basis of the depreciable portion of the property to claim at least a partial deduction.
“The final rules are the result of several months of advocacy and collaboration between NAR, our members, and the administration,” says NAR President John Smaby. “They reflect many changes that NAR sought to ensure the new 20 percent deduction applies as broadly as possible.”
The NFL does have a mechanism that could, theoretically, give the Saints another shot at going to the Super Bowl after the league admitted that the officials blew the call on a play late in the NFC Championship that should have been called pass interference and a helmet to helmet hit on the Rams.
— Read on wwl.radio.com/blogs/dave-cohen-wwl-first-news-early-edition/could-new-orleans-saints-get-re-do-after-blown-call
As a student at Spelman College, Ruby Doris Smith participated in sit-ins in Atlanta, inspired by the Montgomery Bus Boycott of 1955 and the Greensboro, NC sit-ins of 1960. In April 1960, Smith attended a mass meeting for college students at Shaw University –– the founding meeting of the Student Nonviolent Coordinating Committee (SNCC). .
At just 18, Smith traveled to Rock Hill, SC along with three other SNCC activists –– J. Charles Jones, Diane Nash, and Charles Sherrod –– to participate in the sit-in movement there. The group of SNCC activists decided not to post bail (“jail-no-bail”) in solidarity with local activists who were arrested, harassed, and beaten. .
Smith continued her activism by participating in the 1961 Freedom Rides, when she was again arrested and jailed. In addition to putting her body on the line, Smith served as administrative secretary of the SNCC Atlanta office, which included organizing the 1964 Freedom Summer campaign in Mississippi. In 1966, Smith became SNCC’s executive secretary, the first and only woman to serve in the position. .
Tragically, Ruby Doris Smith Robinson died from cancer on Oct. 7, 1967 at 25.
President Donald Trump has suggested his shutdown could last “for months or even a year or longer” due to his insistence on extorting taxpayer money for a border wall that the American public overwhelmingly opposes—one that he swore Mexico would pay for. The new Democratic House majority passed legislation to reopen the government, but there is no indication that the Republican-controlled Senate will agree to end this impasse soon. Senate Majority Leader Mitch McConnell (R-KY) has voiced his refusal to bring legislation to reopen the government to the Senate floor despite the fact that the chamber passed a similar deal unanimously just three weeks ago.
Because of the shutdown, nearly 800,000 federal workers have either been furloughed from their jobs without pay or been required to stay on the job without pay. As the shutdown drags into its third week, federal employees across the country are missing out on more than $2 billion in total for each pay period that they go without a paycheck. Federal employees have generally received backpay after previous government shutdowns ended. But employees of federal contractors—typically low-wage roles—are much less likely to receive backpay. This means that these workers will not only suffer financial stress but also permanent monetary losses. As Trump continues to rationalize his shutdown by stoking fear, he is harming the very people who protect this country. CAP 1/7/19
(Compliments of #DanetteONealRealtors-Nola/ATL 504.365.7325/770.981.1999)
As of midnight on December 21, 2018: This partial shutdown includes some federal housing, mortgage, and other programs of interest to the real estate industry. While this is a very politically dynamic event, the National Association of Realtors staff continue to monitor federal agencies and work with Congress, the Administration, and other groups to assess ongoing impacts to Realtor members and their businesses.
Environmental Protection Agency
Under EPA’s shutdown plan(link is external), most employees are now furloughed. This will affect various regulatory programs and compliance activities, such as wetlands determinations under the 404 program and enforcement of the lead-based paint disclosure and renovation, repair and painting programs.
Federal Housing Administration
HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program except for HECM loans. It will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. FHA Contractors managing the REO/HUD Homes portfolio can continue to operate. Some delays with FHA processing may occur due to short staffing. Read more about these delays(link is external).
Government Sponsored Enterprises (GSEs)
During previous shutdowns, Fannie Mae and Freddie Mac have continued normal operations since they are not reliant on appropriated funds. On December 26th both GSEs updated or clarified their loan purchase requirements in case of a shutdown. Freddie Mac requires all borrowers to sign a 4506T request form prior to close, but the request does not have to be processed prior to close. Fannie Mae requires the same unless the borrower’s income can be verified though Fannie Mae’s proprietary Desktop Underwriter verification system in which case no 4506T is required.
Internal Revenue Service
The IRS will close and suspend the processing of all forms, including requests for tax return transcripts (Form 4506T). While FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA. Delays can be expected if the shutdown continues. Some loan originators may adopt revised policies during the shutdown, such as allowing for processing and closings with income verification to follow, as long as the borrower has signed a Form 4506T requesting IRS tax transcripts. On loans requiring a Form 4506T, see the GSE section above for additional details.
National Flood Insurance Program (NFIP)
After NFIP operations were initially suspended over questions raised by government attorneys, NAR worked with the White House and Congress to clarify that the government shutdown does not affect the sale or renewal of flood insurance policies or the payment of claims on existing policies. Disaster relief, airport screenings and other essential homeland security functions are unaffected. View the FEMA release(link is external) resuming the full and normal operations of the NFIP.
Rural Housing Programs
The U.S. Department of Agriculture will not issue new rural housing Direct Loans or Guaranteed Loans. Scheduled closings of Direct Loans will not occur. Scheduled closings of Guaranteed Loans without the guarantee previously issued will be closed at the lender’s own risk.
Visa Programs – EB-5 and H-2B
Until the shutdown ends and the Regional Center EB-5 program extension is signed into law, the EB-5 Immigrant Investor Regional Center Program is suspended and no new I-526 petitions can be filed. Investors must continue to file timely responses to USCIS Requests for Evidence (RFE) and Notices of Intent to Deny (NOID). In addition, investors may continue to prepare and file I-829 petitions.
While the Department of Labor was funded for 2019, the Department of Homeland Security was not. Therefore, while the H-2B Temporary Worker Visa program is still operational for workers currently in the U.S., the DHS is unable to approve any new or returning workers under an H-2B visa.
Changes to the itemized deductions for 2018.
The new tax law suspended the deduction for personal casualty and theft losses. Personal casualty and theft losses are now deductible only to the extent they’re attributable to a Federally declared disaster. The claims have to include the FEMA code that was assigned to the disaster as well.