You’re likely familiar with the federal tax reform law enacted in 2017. After all, it reduced tax rates for businesses and individuals, increased the standard deduction and family tax credits, and limited deductions for state and local income taxes and property taxes, among other things. However, you may not be familiar with a particular provision of that law, and related IRS guidance, that provides an opportunity specific to rental real estate businesses.
Voters will soon decide whether to increase taxes on improvements to buildings within the Los Angeles Unified School District, including apartments. On the June 4 ballot is Measure EE, which would levy a parcel tax of 16 cents per square foot of building improvements annually for 12 years. If approved, the measure is expected to raise $500 million per year for L.A. Unified, which is the nation’s second largest school district.
The California Apartment Association has offered its support for a bill that would raise the state’s renter’s tax credit for the first time in decades. “Housing costs are going through the roof in California, and families are struggling to pay the rent,” said state Sen. Steve Glazer, D-Contra Costa. Glazer unveiled the bill Wednesday with two principal coauthors — Assemblywomen Lorena Gonzalez, D-San Diego, and Sharon Quirk-Silva, D-Orange County, as well as 28 coauthors. The legislation, SB 248, would increase California’s renter’s credit for the first time in 40 years and would represent significant help to single parents in particular.… Read More
A CAA-supported bill that would increase the state tax credit for renters has advanced to the state Assembly. On May 30, SB 1182 by state Sen. Steve Glazer, D-Orinda, won approval on the Senate floor with 37 yes votes, zero no votes and two abstentions. The bill would increase the renters’ tax credit incrementally over a five-year span. “Under current law, homeowners in California receive state and federal tax benefits, as a result of owning their own home,” CAA says in a letter supporting the bill. “Renters, however, do not receive comparable tax benefits. It’s reasonable to provide renters, who… Read More
The California Apartment Association is opposing a measure that’s seeking to create one of the largest tax increases in state history. Assembly Constitutional Amendment 22 proposes to ask voters to approve a 10 percent “surcharge” on California employers. Companies with annual net income of more than $1 million that are subject to corporate income and franchise taxes in California would be required to pay the new tax. The tax proposal comes from Assemblymen Kevin McCarty, D-Sacramento, and Phil Ting, D-San Francisco, and has met fierce opposition from a large coalition of business groups, including CAA.
The city of San Jose has given residential landlords more time to register their properties with the city and to pay the related business tax, a move applauded by the California Apartment Association. The new deadline for residential rental property owners is June 30, 2018. After that date, interest and late fees will apply. Businesses can register with the city here.
It’s tax season, so we figured it’s a good time to remind members of two important tax-reporting requirements that can have rental housing providers seeing red if not done correctly. 1099 reporting A business that purchases services in excess of $600 from an unincorporated vendor must report that payment to the IRS and to the service provider on a Form 1099. With limited exceptions, payments made to corporations are excluded from 1099 reporting. A “business” includes a landlord or management company that is engaged in rental real estate as its trade or business for profit. Don’t miss your deadlines. Late-filing… Read More
State Sens. Holly Mitchell and Loni Hancock on Wednesday held a news conference on their bid to amend California’s constitution and undermine California’s Proposition 13. SCA 5 would assess commercial and industrial properties at their market value, stripping away property tax protections under the state’s landmark law. Under this split-roll, it appears residential property, such as rental housing, would retain the tax protections offered by the 1978 voter-approved proposition. Getting Mitchell and Hancock’s measure before voters in 2016 would first take approval by a two-thirds majority in the state Legislature. Support for splitting the tax roll in California, however, has… Read More
The California Apartment Association is working to defeat a November ballot measure that would levy unfair and exorbitant taxes that hurt both landlords and renters in Antioch. CAA’s campaign, dubbed “No on Measure O,” includes a coalition of seniors, homeowners and local business owners. However, this tax would not resolve the city’s chronic deficits — and is likely to be used for nothing more than City Hall salaries. Because Measure O was presented as a general tax, the City Council does not have to specify where or how the additional tax revenues will be spent. Besides singling out one segment… Read More
A Proposition 13-related bill that would have closed a change-of-ownership loophole died in the Legislature last week. Assembly Bill 2372 failed Thursday in the Senate Appropriations Committee. “I’m disappointed that we came so close to finally closing one of the worst loopholes of Prop. 13,” the bill’s coauthor, Assemblyman Tom Ammiano, D-San Francisco, said in this Los Angeles Times article. “We finally had some business interests agreeing that the structure was unfair.” Coauthored with Assemblyman Raul Bocanegra, D-Pacoima, the revised bill would have triggered reassessments following the sale of commercial property whenever 90 percent of the property is sold over… Read More