How the Trump Tax Plan Benefits Real Estate Crowdfunding Investors
Have you read the new Republican tax law? Who’s got the time, right? If you’re a real estate investor, though, you may want to examine a portion of the final bill that was added in the late stages of the process. It just may save you millions.
The change allows real estate investors to take advantage of a new break that provides a 20-percent deduction on taxable income for pass-through companies. A pass-through is a special type of corporate structure popular among small business owners. Pass-throughs avoid the double taxation of paying corporate and individual taxes. Instead, taxes are applied solely at the individual level.
Anyone who invests in rental real estate may stand to benefit from this new law, so long as they operate using a pass-through company. The law makes it more profitable to own income-generating property, like apartment rentals, by allowing a landlord to simply create a limited-liability corporation for their rental property and pay the pass-through rate of 20 percent instead of the regular income tax rate, which can be as high as 37 percent.
This also means that landlords are incentivized to hold on to their properties longer. The tax reform makes it more profitable for investors to rent out properties, but is likely to decrease the number of affordable homes for sale. Single-family housing remains starved for inventory, especially in the starter-home segment, where investors have scooped up housing and turned it into rentals. Many expect prices of single-family homes to go up in 2018.
In a highly competitive marketplace, Zeus CrowdFunding offers lending solutions to buyers across the real estate spectrum. Whether you want to move fast on an attractive home flip or fix and hold a rental property as demand continues to rise, we can provide a custom loan for your needs at up to 80 percent of the property’s after-repair value (ARV). In the wake of the tax law, inventory may be more scarce in 2018 and beyond. So, don’t wait—fill out our three-minute application now and tell us what you need. This could potentially be the most lucrative year yet for real estate crowdfunding investments in the U.S.