TAX REFORM. Rental properties continue to have tax advantages after Tax Reform. For example, State and local taxes for businesses and rental properties remain deductible after tax reform. Likewise, properties held for more than twelve months qualify for lower capital gain rates.
iNSTALLMENT SALES. If you sold real estate in 2017 in return for a note under which you receive payment in 2018 or after, you generally are to report the sale on the installment method (using Form 6252). This method taxes you on gain in proportion to the principal you are paid each year so it reduces gain in the year of sale and moves gain to 2018 or after. It offers many tax advantages.
By reducing gain in the year of sale and moving gain to 2018 or after, you enhance many tax benefits that phase out as your Adjusted Gross Income rises, such as itemized deductions, personal exemptions, and education credits. By moving gain to 2018 or after you take advantage of better tax rates and other rules under Tax Reform.
A taxpayer can elect out of the installment sale rules by reporting all gain from the sale on Form 4797, Sales of Business Property, and/or Form 8949, Sales and Other Dispositions of Capital Assets, for its tax return for the year of the sale. by the due date (including extensions) for the filing of the return for the year of the sale.
The installment method generally cannot be used for dealer dispositions or dispositions of inventory. These must be treated as received in the year sold.
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