The IRS recently issued some guidelines that allow real estate investors to take a tax deduction for up to 20% of the income they generate from rental properties. These guidelines were issued in January 2019 to clarify certain provisions of the 2017 Tax Cuts and Jobs Act. Click here to view the full announcement and the new guidelines.
- (i) advertising to rent or lease the real estate;
- (ii) negotiating and executing leases;
- (iii) verifying information contained in prospective tenant applications;
- (iv) collection of rent;
- (v) daily operation, maintenance, and repair of the property;
- (vi) management of the real estate;
- (vii) purchase of materials; and
- (viii) supervision of employees and independent contractors.
Rental services may be performed by owners or by employees, agents, and/or independent contractors of the owners. The term "rental services" does not include financial or investment management activities, such as financing; procuring property; studying and reviewing financial statements or reports on operations; planning, managing, or constructing long-term capital improvements; or hours spent traveling to and from the real estate.
- (i) hours of all services performed;
- (ii) a description of all services performed;
- (iii) the dates on which such services were performed; and
- (iv) who performed the services.
The contemporaneous records requirement will not apply to taxable years beginning prior to January 1, 2019.
