How Tax Reform May Impact Your Business

ON DEC. 14, NVAR hosted its final 2018 Friday Focus: “Year-End Tax Planning for Realtors®” with Sam Klausner, CPA, Klausner & Company. Klausner discussed changes resulting from the Tax Cuts and Jobs Act of 2017 and ways Realtors® could prepare before the new year.

“Please take a look at [the Qualified Business Income Deduction] if you are self-employed,” Klausner said. “It could be a big deduction. I can’t say that enough.”

Learn more about that deduction and these additional take-aways:

Qualified Business Income Deduction – Section 199A

Pass-through businesses and self-employed individuals (that means real estate agents!) can deduct 20 percent of their taxable income if it is less than $157,500 (single)/$315,000 (married).

Mortgage Interest Deduction (MID) Capped at $750,000

The limit on deductible mortgage debt was reduced to $750,000 for loans taken out after Dec. 15, 2017.

State and Local Taxes (SALT) Deductions Limited to $10,000

Homeowners cannot deduct more than $10,000 of state and local taxes, which includes state and local property, income and sales taxes.

Standard Deduction Nearly Doubled

The doubling of the standard deduction, in combination with changes in MID and SALT deductions, could cause less people to itemize.

*A potential strategy: Consider “bunching” deductions to itemize one year and take the standard deduction the following year.

Self-Employed Individuals Can Still Deduct Certain Business Expenses

Miscellaneous deductions (including the home office deduction) will not be available for employees of companies beginning in 2018, but they are still available for self-employed individuals.

Watch a video of the event at facebook.com/nvar.realestate. Read more about tax reform and the Northern Virginia housing market at NVAR.com/taxarticle.