How does the new tax bill affect LLC owned real estate?

Question

I saw the new tax bill passed in December, and there is a change that pass-through entities (LLCs for example) will get a 20% tax deduction.

Did I read into this correctly? Are any CPAs out there who could shed some light on this or is it just not that simple? I'm just curious if this is an additional incentive to rent properties through an LLC (on top of the liability advantage)?

Michael Plaks · Answer

Correct. Check out this thread.

Logan Allec · Answer

@Roshan Taheri If rental real estate income does in fact qualify for the pass-through deduction -- and there is no chapter and verse on that although most practitioners are operating under the assumption that it does -- you will get the deduction regardless of whether you hold it in your name or through an LLC (as long as the LLC has not elected to be taxed as a C corporation).

Logan Allec · Answer

@Roshan Taheri, income that "passes through" to your individual return (as it does if held by you directly or in a pass-through entity that you own such as an LLC taxed as a partnership or an S corporation) qualifies for the pass-through deduction. There are other limitations if your income is above $157,500 as a single filer or above $315,000 as a married filer.

Roshan Taheri · Answer

@Logan Allec Ah, okay. So the deduction is not specific to an LLC, but any income that qualifies for it?

How does the new tax bill affect LLC owned real estate?

How does the new tax bill affect LLC owned real estate?

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