So any idea what these new Trump taxes are going to do?

10 Replies

Hi guys,

So I live in NJ and apparently people are rushing to prepay some taxes.  I share a rental property with a friend and we're at a loss as to what we should do here. Any advice?

Thanks

Originally posted by @Jake Wa :

Hi guys,

So I live in NJ and apparently people are rushing to prepay some taxes.  I share a rental property with a friend and we're at a loss as to what we should do here. Any advice?

Thanks

Rental property is not subject to the limitations on property taxes. Just your personal residence or state taxes for future years could be reduced to $10,000 per year.

I am also curious.. I have a home in New Jersey that I own. 

Two family where I live on one floor and the other floor is rented. my property taxes are over 10K so does this mean I cannot claim more than 10K?

Originally posted by @Anthony A. Araujo :

I am also curious.. I have a home in New Jersey that I own. 

Two family where I live on one floor and the other floor is rented. my property taxes are over 10K so does this mean I cannot claim more than 10K?

You cannot claim more than 10K personally on your portion of the residence. Assuming you claim the rental income and expenses on Sch E correctly you can claim the rental portion of your taxes without limit.

Originally posted by @Chris Clark :
Originally posted by @Anthony A. Araujo:

I am also curious.. I have a home in New Jersey that I own. 

Two family where I live on one floor and the other floor is rented. my property taxes are over 10K so does this mean I cannot claim more than 10K?

You cannot claim more than 10K personally on your portion of the residence. Assuming you claim the rental income and expenses on Sch E correctly you can claim the rental portion of your taxes without limit.

okay makes sense.. here's another scenario.. my parents own two homes. one is a single family the other is a multifamily which is rented out. under this logic their main residence (single family) is limited to 10K but their multi family which is rented completely has no limit on how much they can claim. correct?

Originally posted by @Anthony A. Araujo :
Originally posted by @Chris Clark:
Originally posted by @Anthony A. Araujo:

I am also curious.. I have a home in New Jersey that I own. 

Two family where I live on one floor and the other floor is rented. my property taxes are over 10K so does this mean I cannot claim more than 10K?

You cannot claim more than 10K personally on your portion of the residence. Assuming you claim the rental income and expenses on Sch E correctly you can claim the rental portion of your taxes without limit.

okay makes sense.. here's another scenario.. my parents own two homes. one is a single family the other is a multifamily which is rented out. under this logic their main residence (single family) is limited to 10K but their multi family which is rented completely has no limit on how much they can claim. correct?

Assuming that the multi-family unit isn't used by your parents at any time as a vacation home yes it would be fully deductible as a rental expense.

Originally posted by @Chris Clark :
Originally posted by @Anthony A. Araujo:
Originally posted by @Chris Clark:
Originally posted by @Anthony A. Araujo:

I am also curious.. I have a home in New Jersey that I own. 

Two family where I live on one floor and the other floor is rented. my property taxes are over 10K so does this mean I cannot claim more than 10K?

You cannot claim more than 10K personally on your portion of the residence. Assuming you claim the rental income and expenses on Sch E correctly you can claim the rental portion of your taxes without limit.

okay makes sense.. here's another scenario.. my parents own two homes. one is a single family the other is a multifamily which is rented out. under this logic their main residence (single family) is limited to 10K but their multi family which is rented completely has no limit on how much they can claim. correct?

Assuming that the multi-family unit isn't used by your parents at any time as a vacation home yes it would be fully deductible as a rental expense.

 Chris thanks so much for this information.. do you know where i can find this information that i can forward to my accountant? I couldn't find anything online that states that.

Chris, 

Thank you this is invaluable.  So my taxes are $11k, and this is a two family home.  I live one unit with my business partner so "taxes" would be $5500/2 = $2500 and the rental would be $5500.  So that $5500 would be exempt from the overall 10K right?

I sincerely appreciate your fast response and @here all your fantastic comments. 

Thanks,

Wayne

Originally posted by @Jake Wa :

Chris, 

Thank you this is invaluable.  So my taxes are $11k, and this is a two family home.  I live one unit with my business partner so "taxes" would be $5500/2 = $2500 and the rental would be $5500.  So that $5500 would be exempt from the overall 10K right?

I sincerely appreciate your fast response and @here all your fantastic comments. 

Thanks,

Wayne

Generally speaking expenses like taxes would be best split by square footage for what is rented vs. what isn't. The portion for the section that is rented would not be subject to the 10K limit.

Thank you Chris!  That makes perfect sense!!!

The tax bill is great if you have a pass through entity such as an LLC. Get one. Super cheap. Deed your properties over to them that generate income and reap the benefits if I were you. If you don't listen to Real Estate News for Investors by Kathy Fettke podcast, go listen to her most recent podcasts regarding this. She gives very good general overviews of the bill that ended up passing after it was revised, which is very good for real estate investors who have pass through entities such as these. Hope this helps.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.