Public Affairs Update……………………………….……………………January 30, 2019
- Treasury, IRS Give Big Win to Real Estate Professionals in Qualified Business Income Rule
- Legislation to Approve Electronic Notarization
- Pizza & Public Affairs Wednesday February 6, 2019 Noon to 1:00pm at BARA
- In Case You Missed It
Treasury, IRS Give Big Win to Real Estate Professionals in Qualified Business Income Rule
WASHINGTON (January 22, 2019) – Late last week, the Treasury Department and the Internal Revenue Service issued final regulations regarding the new 20 percent deduction on qualified business income. As Americans begin preparations for the 2018 tax filing season, real estate professionals have been uncertain about the true impact of the 2017 Tax Cuts and Jobs Act on their respective businesses. Friday’s ruling from Treasury and the IRS, however, signaled a significant victory for the real estate industry and for many of the National Association of Realtors®’ 1.3 million members.
These final guidelines will allow real estate professionals to benefit from the Section 199A 20 percent pass-through deduction, a move that will empower Realtors® to expand their operations and provide improved services to consumers and potential homebuyers across the country.
A central component of the new tax law is a reduction of the corporate tax rate – from 35 to 21 percent. However, since nine out of ten American businesses are structured as pass-through entities rather than corporations, the Section 199A provision provides critical tax deductions for small businesses and self-employed independent contractors, which is how many real estate professionals are classified.
Within the 247-page rule issued last Friday, three major provisions for real estate professionals stood out as critical victories for members of the National Association of Realtors®. Most importantly, the regulation clarifies that all real estate agents and brokers who are not employees but operate as sole proprietors or owners of partnerships, S corporations or limited liability companies are eligible for the new deduction, which can be as high as 20 percent. This includes those whose income exceeds the threshold of $157,500 for single filers and $315,000 for those filing a joint return. Second, the rule simplifies the process that owners of rental real estate property must follow to claim the new deduction. As written in the Tax Cuts and Jobs Act, only income that is from a “trade or business” qualifies for the 20 percent write-off. However, because this distinction was not clearly defined by Congress when crafting the law, various court rulings and prior IRS guidance have caused confusion among tax professionals in determining which rental properties were merely investments and which could accurately be considered a business enterprise.
NAR strongly urged Treasury and the IRS to simplify the rules in order to give millions of rental real estate owners certainty surrounding their ability to qualify for this new deduction. Friday’s final regulations included a bright-line safe harbor test requiring at least 250 hours per year spent on maintaining and repairing property, collecting rent, paying expenses and conducting other typical landlord activities.
Finally, within the proposed regulation released last August, those who had exchanged one parcel of real estate under Section 1031 for another parcel were unfairly denied deduction eligibility. However, NAR and multiple additional trade groups concerned with commercial real estate were vocal in highlighting this shortcoming. In a positive resolution to the situation, Treasury and the IRS recognized the initial ruling was misguided and corrected the policy in its final guidance. [Source: NAR Update 01-23-2019]
While current laws don’t preclude recording electronically signed documents, here’s why it’s important to make it as clear and easy as possible for county officials to accept digital documents. Editor’s note: This feature originally appeared in the January issue of DS News. » READ MORE [Source: DSNews.com 01-25-2019]
Pizza & Public Affairs Wednesday February 6, 2019 Noon to 1:00pm at BARA
Karl Guiler/Phil Kleisler, COB Senior Planners on Community Benefits Requirements to Seek an Exemption to Exceed the By-Right Height Limit
Andrea Meneghel, Public Affairs Director, Boulder Chamber will provide the Boulder business perspective on Community Benefit Project issues.
COMMUNITY BENEFIT PROJECT
Why is the city undertaking this project?
A community benefits program has been discussed as one tool to ensure that new growth and development contribute positively to Boulderites’ quality of life. While higher quality of development is often attained through the Site Review process, in recent years community sentiment has expressed that more specific community benefits should be required in exchange for additional height, intensity or density.
What is the Community Benefits Project?
Community benefit programs typically include a suite of regulations and incentives that tie specific community benefits to requests for additional development rights (like building height, floor area and residential density). These programs identify the specific amount and type of community benefit required with specific development requests.
For example, some properties in Boulder are eligible to request a “Height Modification” to allow an additional one or two stories (up to 55 feet) when the zoning only allows three stories. Boulder’s community benefits program would provide a menu of options – like affordable housing, affordable commercial space, community gathering space and public art – to be provided as part of the project. The specific amount of required benefits would be proportional to the bonus amount requested.
The Community Benefit Project outcomes will have a very significant impact on how much new housing is added to our community and where it is located.
Don’t miss this opportunity to get up to speed. RSVP Today!
Upcoming Pizza & Public Affairs Events
- March 6, 2019 Dr. Donald Haddad, St. Vrain Valley School District Superintendant
- April 3, 2019 Dr. Rob Anderson Boulder Valley School District Superintendant
In Case You Missed It