Daniel Cuddy photo
Cuddy Financial Services logo

Daniel R. Cuddy, CPA, CFP®

Personal Financial Representative

 

Cuddy Financial Services

7 William Street

Auburn, NY 13021

 

Phone:  315-252-3600

Fax:      315-252-3625

 

Email: dcuddy@cuddyfinancial.com

2022 Tax Planning Guide

Rental Real Estate Tax Benefits

House for rent label

Certain interests in rental real estate now qualify for the 20% pass-through income deduction. These enterprises are generally defined as owning real estate for purposes of generating rental income. To claim the deduction, you’ll need to meet these requirements:


  • Keep separate books showing income and expenses for each rental real estate enterprise.

  • Complete 250 hours or more of rental services each year if your rental real estate enterprise is less than four years old. For properties you've owned longer, 250 or more hours of rental services must have been performed in at least three of the past five years. Rental services include advertising the property for rent, collecting rent, and completing routine repairs or maintenance on the property.

  • Maintain meticulous records, including time logs for hours of all services performed, description of all services performed, dates on which such services were performed, and who performed the services. Attach this report to your tax return.
    The formula to figure out your tax liability with the pass-through income provision is complex, so work with your tax professional, who can help you calculate your pass-through income and its tax.


SALT TAX WORK AROUND
The IRS now allows a pass-through entity tax (PTE tax) that would allow partnerships and S-corporations to pay state income taxes, without limitations, at the entity-level, rather than on the personal returns of the partners or owners. These taxes become deductible for the business, lowering taxable income.


Over 20 states have enacted PTE tax legislation, and some require an annual election to pay the tax, while others have irrevocable elections. While the PTE tax may be deductible for federal income tax purposes, states may have different rules. Be sure to chat with your tax professional to see if this work around makes sense for you and your business.


SUBSCRIBE

Enter your Name and Email address to get
the newsletter delivered to your inbox.

Please include name of person that directed you to my online tax guide so I can thank them personally.


CONTACT US

Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

Cuddy Financial Services and LTM Client Marketing are unrelated companies. This guide was created by LTM Client Marketing and was not written or created by the named financial professional and does not necessarily represent the views and opinions of Avantax Wealth Management® or its subsidiaries.
Avantax affiliated advisors may only conduct business with residents of the states for which they are properly licensed and registered. Securities offered through Avantax Investment Services, Member FINRA, SIPC, Investment advisory services offered through Avantax Advisory Services, Insurance services offered through an Avantax affiliated insurance agency. Not all products and services are offered by all financial professionals. Products and services listed may only be offered by properly licensed individuals.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.