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Tax-Saving Tips - June 2019

Tax-Saving Tips June 2019
Combine Home Sale with the 1031 Exchange You don’t often get the opportunity to even consider making a tax-saving double play. But your personal residence combined with a desire for a rental property can provide just such an opportunity.
The tax-saving strategy is to combine the tax-avoidance advantage of the principal residence gain exclusion break with the tax-deferral advantage of a Section 1031 like-kind exchange. With proper planning, you can accomplish this tax-saving double play with full IRS approval.
The double play is available if you can arrange a property exchange that satisfies the requirements for both the principal residence gain exclusion break, and tax deferral under the Section 1031 like-kind exchange rules.
The kicker is that tax-deferred Section 1031 exchange treatment is allowed only when both the relinquished property (what you give up in the exchange) and the replacement property (what you acquire in the exchange) are used for business or i…

April Tax Saving Tips

Tax-Saving Tips April 2019
Good News: Most Rentals Likely Qualify as Section 199A Businesses The Tax Cuts and Jobs Act tax reform added new tax code Section 199A, which created a 20 percent tax deduction possibility for you if your rental property (a) has profits and (b) can qualify as a trade or business. As the law now stands, with rentals that achieve trade or business status, you win. Your business-status rental property creates the following five possible tax benefits for you: Your rental property can create a Section 199A tax deduction of up to 20 percent of the rental property’s qualified business income.Your rental property receives tax-favored Section 1231 treatment, which (upon sale) delivers with a tax loss—an ordinary loss (the best kind of loss)—and with a tax-favored capital gain (the best kind of gain).Your rental property can create the home-office deduction if you meet the other home-office requirements of exclusive and regular use.…

February Tax Saving Tips

Tax-Saving Tips February 2019
IRS Issues Final Section 199A Regulations and Defines QBI Your ownership of a pass-through trade or business can generate a Section 199A tax deduction of up to 20 percent of your qualified business income (QBI). The C corporation does not generate this deduction, but the proprietorship, partnership, S corporation, and certain trusts, estates, and rental properties do.
The tax code says QBI includes the net dollar amount of qualified items of income, gain, deduction, and loss with respect to any qualified trade or business of the taxpayer.
Sole Proprietorship QBI
The QBI for the sole proprietor begins with your net business profit as shown on your Schedule C. You then adjust that profit as follows:
·Subtract the deduction for self-employed health insurance. ·Subtract the deduction for one-half of the self-employment tax. ·Subtract qualified retirement plan deductions. ·Subtract Section 1231 net losses (ignore gains).
Example. You have $120,000 of net income on Sche…

January Tax Saving Tips