With the recent spike in Coronavirus cases, expanding your rental real estate business may not be the first thing on your mind these days. But for investors who are in a position to do so, there could be some added perks based on the provisions of the CARES Act legislation.

The Coronavirus Aid, Relief, and Economic Security – or CARES – Act was put into effect on March 27th (2020), in an effort to provide some financial relief for those who have lost their job (either temporarily or permanently), as well as others who may be struggling financially due to the pandemic.

Some of the key pieces of the legislation include the allowance of qualified individuals to access funds from traditional IRAs and certain employer-sponsored retirement plans without being subject to the 10% IRS early withdrawal penalty that is typically incurred by those who are under the age of 59 ½. The Act also increases the amount of funds that may be accessed from various retirement plans.

Based on some of the modifications that the CARES Act made to the Tax Cuts and Jobs Act of 2017, though, there could be some substantial benefits incurred by real estate investors. For instance, the Act relaxed some of the limitations on the use of property-related losses, which in turn, may result in obtaining a tax refund for previous years.

In addition, the “qualified improvement property provisions” that are also found in the CARES Act could result in larger depreciation deductions for investors who have recently made interior improvements to non-residential properties.

If you own rental property in Orlando and/or the Central Florida locale and you have questions about the tax and financial impact, give us a call. In addition to the day-to-day tenant and property management services we offer, we also have a CPA on our staff who can provide you with accounting and financial reporting processes, as well as the relevant tax materials that are needed regarding your rental property(ies) – which can make your life a whole lot easier.

 

 

Sources

CARES Act Provisions May Benefit Real Estate Owners. April 21, 2020. New York Law Journal.