The bonds will be backed by rental income from real estate at Broadgate Centre in London's financial district.
For payments after 2010, a person receiving rental income from real estate was considered engaged in the trade or business of renting property for information reporting purposes.
This is due to the fact that for real estate professionals, rental income from rental real estate activities is earned through active participation in the renting on the properties.
FORBES: Not so Fast: an Additional Obstacle for Real Estate Professional in the 3.8% Medicare Surtax
Your income from this real estate is several million dollars a year.
Therefore since for general income tax purposes, income earned from renting real estate should not be included in the calculation of the 3.8% Medicare Surtax.
FORBES: Not so Fast: an Additional Obstacle for Real Estate Professional in the 3.8% Medicare Surtax
In other words, before real estate professionals can exclude rental real estate income from the calculation of their 3.8% Medicare Surtax obligation, they must first test to see whether the rental real estate activity is from an ordinary trade or business, as defined in Code Sec. 162.
FORBES: Not so Fast: an Additional Obstacle for Real Estate Professional in the 3.8% Medicare Surtax
At least 75% of REIT income needed to be derived from real estate, typically in the form of rent.
FORBES: REITs Boom As More Industries Discover This Tax-Friendly Structure
By creating an entity called a taxable REIT subsidiary (TRS), the companies can separate the operational side of their private prison management from the real estate side of owning and generating income from correctional facilities.
FORBES: Why Would A Prison Corporation Restructure As A Real Estate Company?
However, if the rental real estate activities of the real estate professional are not section 162 trades or businesses, the gross income from rents derived from such activity will not be excluded under section 1411(c)(1)(A)(i) by the ordinary course of a trade or business exception.
FORBES: Can Real Estate Professionals Beat The 3.8% Obamacare Tax ?
That's because most high earners can use "passive" real estate losses only to offset passive income (say, from profitable rentals) and not to reduce tax on income from their salary or stock and bond investments.
Enterprise Products (nyse: EPD - news - people) is a master limited partnership, a specialized investment vehicle somewhat like a real estate investment trust, which is exempt from corporate income taxes as long as it pays out almost all of its profits to investors.
The average REIT trades at 17 times the real estate version of earnings, called funds from operations (net income plus depreciation, minus nonrecurring gains).
Properly structured, 1031-exchange securities can enable investors to shelter real-estate sales from capital-gains taxes, to obtain regular income and to bequeath the asset to their heirs in a tax-efficient manner.
However, for this taxable year, real estate professionals should be aware that they must also test the income was derived from the ordinary course of that business.
FORBES: Not so Fast: an Additional Obstacle for Real Estate Professional in the 3.8% Medicare Surtax
The implied return on investment in real estate is tied to an expectation of ever-rising prices, not to income from property.
The rating incorporates income data from the department of Housing and Urban Development, transaction data drawn from court records by First American Real Estate Solutions, a Santa Ana, Calif.
Both landlords and REIT shareholders benefit from tax laws that permit a depreciation writeoff for investment real estate, which shelters some of the income.
应用推荐