Real Estate Investors Expecting the 20 Percent Tax Deduction Under the New Tax Law Might Be Disappointed
When it comes to property, determining what constitutes a trade or business isn’t always easy.
More than 30 years ago, the tax law was changed to come down hard on passive investors by limiting the losses they could claim under the passive activity loss (PAL) rules. The Tax Cuts and Jobs Act (TCJA) did not make a distinction between active and passive investors when it comes to the qualified business income (QBI) deduction. But there is a different problem for real estate investors to resolve.