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Own a Rental Property? Why Filing Your Taxes This Year Rules

If one owns a rental property in 2018, they’re in luck. The Tax Cut and Jobs Act of 2017 made significant changes to rental property owners which will maximize their profits. With the Act, landlords can now have a tax break that is broken up and spread up throughout the years to come. In addition, if their property qualifies, they may not even pay tax on their rental income, which is a huge chunk of change for most. The act also acknowledges that up to 20% of the rental revenue can be tax free. This means that landlords can deduct more home improvements. Overall, the Act is expected to be an advantage for rental property owners if they do their research to make the tax work for their specific situation.

Key Takeaways:

  • The Tax Cuts and Jobs Act of 2017 is generally favorable towards rental property owners, although consulting with a tax professional is advisable in order to determine how it impacts you.
  • Benefits include the ability to take a larger first year depreciation deduction, not having to depreciate as many property improvement costs, and counting up to 20% of rental income as tax free.
  • One downside is that there is now a cap on property rental losses, but even this is high enough that it won’t affect many property owners.

“Blame it on wear and tear, or just the passage of time, but in the eyes of the IRS, rental property depreciates over time. For landlords, that’s a tax break—typically one that’s spread out over several years.”

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