Written by A.D. Pruitt The Wall Street Journal
The presidential election could determine whether the wealthiest Americans will see their income taxes rise or fall. But there is one tax increase that is likely to occur no matter who wins office: an investment surtax that begins on New Year’s Day and will hit thousands of real-estate investors.
The tax won’t affect real-estate companies or those who work full-time managing their real-estate portfolio. But so-called passive investors—those who dabble in real estate part-time but have other jobs—could be subject to a 3.8% surtax on rental income from the properties.
The tax, which was included in the Affordable Healthcare Act passed by Congress in 2010, is intended to raise funds to pay for the law. It covers all types of investment income, not just real-estate income. But the rules regarding real-estate investors, including guidelines that determine who is and isn’t a passive investor, remain in contention. And that is causing confusion and anxiety.
“Some of the confusion is whether existing rules will apply to rental activities” for purposes of the new tax, said Jeanne Sullivan, a director in the Washington National Tax office of KPMG, referring to a handful of longstanding provisions relating to real-estate professionals under the current tax code.
To read this article in its entirety click HERE.
To view this week’s Featured Property click HERE.
Ryan Eaton joined Saurage Rotenberg Commercial Real Estate in 2011. Ryan is a graduate of Lee High School and Louisiana State Universtiy (LSU) where he earned a Bachelor of Arts degree with concentrations in business, sociology and speech communication. Ryan’s professional memberships include the Greater Baton Rouge Association of REALTORS® Commercial Investment Division, Louisiana Commercial Database (LACDB). He is also a member of the Baton Rouge Advocates for Safe Streets (BRASS).
Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Growth Coalition; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).