Real Estate 199A Aggregation and 469 Grouping Rules: Real Estate Professionals and Safe Harbor Election

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, July 2, 2019

Recorded event now available

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This course will discuss strategies for real estate professionals, agents and investors after tax reform. The release of final Section 199A regulations provided guidelines for the 20% QBI deduction and Notice 2019-07 provided a welcomed 250-hour safe harbor that qualifies rental real estate to be treated as a trade or business. The panel will explain 199A and the final regulations, depreciation, grouping under Section 469, aggregating properties under 199A, deductible expenses, and planning techniques for real estate owners after tax reform.

Description

Practitioners have long dealt with grouping elections under Section 469 to meet the material participation rules and avoid passive loss limitations. However, this "grouping" election is irrelevant to the "aggregation" of properties under 199A. In other words, properties may be "grouped" one way to avoid passive loss limitations and "aggregated" another way to maximize the 20% deduction under 199A. Whether or not an election is made to aggregate, losses from QBI entities are allocated pro-rata to profitable entities, effectively lowering total income for the 20% deduction. Meeting the criteria for the aggregation election is complicated, but the payoff can be tremendous.

In addition to the complexities of QBI, there are 163(j) interest limitations and new depreciation rules brought about by the tax act. Additionally, determining the specific criteria for qualifying real estate as a trade or business under Section 162 remains uncertain. Real estate may be the practice area most significantly impacted by tax reform, but it is also an area with significant planning opportunities.

Listen as our panel of experts explains the complexities of new 199A safe harbor, its interplay with the grouping election under Section 469, the higher depreciation limits, changes to meals and entertainment, and the effects of these changes on real estate enterprises.

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Outline

  1. 199A and the new safe harbor
  2. Aggregation and 199A
  3. Grouping under Section 469
  4. 163(j) interest limitation
  5. Depreciation after tax reform
  6. Meals and entertainment after tax reform
  7. Best practices for real estate enterprises

Benefits

The panel will review these critical issues:

  • Meeting the new trade or business safe harbor
  • Aggregating real estate properties under 199A
  • Grouping properties to materially participate
  • Maximizing the higher depreciation thresholds
  • Maximizing the 20% QBI deduction

Faculty

Lovett, Brian
Brian T. Lovett, CPA, JD
Partner
Withum Smith+Brown

Mr. Lovett has extensive experience serving the tax needs of both public companies and closely-held businesses,...  |  Read More

Moore, Guinevere
Guinevere M. Moore
Shareholder
Moore Tax Law Group

Ms. Moore serves as an attorney and a professional partnership representative to her clients. She has over a decade of...  |  Read More

Wheat, Kira
Kira Wheat
Senior Tax Manager
DHJJ

Ms. Wheat has over 14 years of experience serving a diverse client base, including high net worth individuals and...  |  Read More

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