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Real Estate Industry Tax Update 

As we progress through the ever-evolving tax environment, real estate professionals need to stay updated on the latest tax law changes and IRS guidelines that could impact your business. Here is a brief overview of the most relevant tax updates for the real estate industry for the tax years 2023 and 2024.

Tax Year 2023 Updates:

Qualified Business Income Deduction Adjustments

The IRS has made adjustments to the Qualified Business Income (QBI) deduction, which may affect realtors and real estate brokers operating as pass-through entities. It’s important to review the latest thresholds and limitations to maximize this deduction for your business.

Energy Efficient Home Credit Extensions

The Inflation Reduction Act has extended the Energy Efficient Home Credit, which could benefit real estate developers and builders who construct energy-efficient residential properties. Ensure you’re aware of the updated criteria to take advantage of these credits.

1031 Exchange Clarifications

The IRS has provided additional guidance on the rules surrounding 1031 exchanges. As a real estate professional, staying informed on these regulations is crucial for advising clients on tax-deferred property exchanges.

Looking Ahead to Tax Year 2024:

Real Estate Depreciation Updates

The IRS may issue new regulations regarding the depreciation of real estate assets. Real estate professionals should monitor these developments to optimize their tax strategies related to property depreciation.

Increased Scrutiny on Real Estate Professional Status

The IRS is expected to heighten its focus on the criteria for qualifying as a real estate professional for tax purposes. This could have significant implications for your ability to claim real estate losses against other income.

Disaster Relief Provisions

For real estate businesses affected by natural disasters, the IRS has extended certain tax filing and payment deadlines. This relief provides additional time to fulfill tax obligations while recovering from such events.

We recommend all real estate professionals thoroughly examine these updates and assess their potential impact on your business or your clients. Our team of tax and accounting specialists is prepared to answer any questions or provide more in-depth guidance as needed.

Keep ahead of the curve, ensure compliance, and let us support you through the complexities of the tax landscape.

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