Real Estate Tax Limitation

I seem to get this question a few times a week so I want to address it.  The question usually relates to whether you can continue to deduct your real estate taxes on your farm land rental or farm business.  The bottom line is yes, you will continue to deduct 100% of your business and rental real estate taxes.

The only change proposed by both the House and the Senate is to limit the itemized deduction for real estate property taxes on your home or other personal real estate to $10,000.  For most farmers, their real estate tax on their personal residence is well under $10,000, so there should be no change for almost all farmers.

These new tax proposals are confusing and we will continue to provide guidance.

 

  • Principal
  • CliftonLarsonAllen
  • Yakima, Washington
  • 509-823-2920

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives a combine each summer for his cousins and that is what he considers a vacation.

Comments

Capital gains on land I am 65 years old selling some ground in 2018 what are my advantages

I have recently heard that property taxes (itemized personal property taxes) prepaid in 2017 but not due until the next year (2018) can be deducted in 2017 but it depends upon the particular state and locality to which they are paid. Can 2018 personal property taxes paid and itemized in 2017 be written off regardless of who they are paid to?

A piece of farm equipment was purchased several years ago and written off when purchased by a C corporation. If the equipment is sold now under the new tax law how is the part written off recaptured? Is the part written off and recaptured taxed at the new corporation tax rate or would the part recaptured be written off under the old corporation tax rate?

Thanks again, Paul. Your analysis is very pertinent!

I always look forward to your advice and comments.

Question: capital gain treatment is not discussed in tax bill summaries. What will it likely be going forward?

Thanks!

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