As we’ve discussed many times in this column, anyone who can qualify as a “real estate professional” for federal tax purposes enjoys some unique tax benefits. First, a real estate professional who owns rental property is allowed to deduct an unlimited amount of rental losses each year. No one else can do this. Real estate pros can because they are not subject to the dreaded passive loss rules. But it gets even better. Real estate professionals are also not subject to the 3.8 percent net investment income tax on their real estate income. The NII tax was enacted to help fund "Obamacare" and took effect with the 2013 tax year. (However, real estate pros do have to pay the 3.8 percent tax on investment income, such as interest and dividends.) So being a real estate professional ...
Mar 31, 2014 by Stephen Fishman
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