Planning For Rental Real Estate After Tax Reform

February 10, 2020

When the tax reform was enacted in 2017, there were more questions than answers about how the new law would apply to rental real estate. Over the past 20 months, the IRS has issued thousands of pages of notices and regulations and we now have a much clearer picture of how the new rules will apply. Regardless of your initial approach, now is a great time to revisit the structure of your renal real estate activities to make sure you are taking advantage of the $1.5 trillion available in tax savings.

Consider these three issues to maximize the tax benefits of your rental real estate:

  1. Whether the rental is classified as a business or investment property for tax purposes;
  2. Whether business or investment classification of rental real estate is better in your circumstances; and
  3. Whether changes can be made to your lease arrangements and rental operations to obtain more favorable tax treatment.


Determining whether a particular rental real estate activity constitutes a business or investment changed when the tax reform added a 20 percent deduction for pass-through business income, a business interest limitation, and an excess business loss limitation, all of which are impacted by the status of the property.

For more information on how the tax reform affects your investment property or for best practices to optimize the tax benefits you receive from your rental real estate contact the attorneys at Rock Fusco & Connelly, LLC.