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  • Writer's picturemonicagraham

IRS provides Ruling on 20% Business Deduction for Rental Income

The Internal Revenue Service has issued final rules on the 20 percent business income deduction (Sec. 199A of the Tax Code) that was enacted in late 2017 as part of the Tax Cuts and Jobs Act. If you generate rental property income, that income can qualify for the new deduction, as long as you can show that your rental operation is part of a trade or business. Per the IRS guideline if your rental activities—which include maintaining and repairing property, collecting rent, paying expenses, and conducting other typical landlord activities—total at least 250 hours a year then it’s a trade or business. If your activity totals less than that, you can still try to take the deduction, but you'll have to be prepared to show the IRS that your activity is part of a trade or business.

You may want to consult your tax advisor to assess your eligibility for the deduction.

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