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Michael Gray, CPA's
Real Estate Tax Letter
December 22, 2014
© 2014 by Michael C. Gray
A monthly report focusing on tax issues for the homeowner and real estate investor.
President Obama signed the Tax Increase Prevention Act of
2014, (HR 5771) last Friday, December 19.
The legislation extends many tax breaks that expired after
2013 for 2014 only.
Here is a list of some of the major provisions:
- 50% bonus depreciation for new property.
- $500,000 limit for Section 179 expense election for
depreciable property of small businesses (phases out when more
than $2 million of property is purchased.)
- 15 year depreciable life for qualified leasehold
improvements, qualified retail improvements and qualified
restaurant property. $250,000 limit for Section 179 expense
election for these types of property.
- Research tax credit.
- Work opportunity tax credit.
- 100% exclusion for gain from qualified small business stock
for stock acquired during 2014 held more than five years.
- Five-year recognition period for S corporation built in
gains when the S corporation was formerly a C corporation.
- State and local sales tax deduction as an alternative to
deducting state income taxes.
- Above the line deduction for qualified post-secondary
tuition and fees. (Phases out for joint filers with adjusted
gross income (AGI) over $130,000 and singles with AGI over
- Teachers above the line deduction for up to $250 of
unreimbursed out-of-pocket classroom expenses.
- Exclusion of up to $2 million ($1 million for married,
filing a separate return) of cancellation of indebtedness
income of qualified principal residence indebtedness.
- Treatment of mortgage insurance premiums as qualified
residential mortgage interest, subject to AGI phaseout.
- Exclusion of up to $100,000 of distributions from an IRA
directly to a charity for taxpayers over age 70 1/2.
- Exclusion of up to $250 of employer-provided mass-transit
benefits (to be the same as employer-provided parking
- Special treatment of charitable contribution of real
property for conservation purposes allows contribution to be
taken up to 50% of the contribution base.
- The nonbusiness energy property credit for making qualified
energy improvements to residential property.
- (Note the plug-in electric vehicle credit was NOT extended.)
Achieving a Better Life Experience (ABLE Act)
- Establishes a tax-favored savings account for individuals
with disabilities for tax years beginning after December 31,
Budget - FY 2015 Omnibus Funding Agreement
- The budget passes for fiscal year 2015 continues a trend of
reducing funding for the Internal Revenue Service. The fiscal
year 2015 budget for the IRS is $10.945 billion, which is $346
million less than for fiscal year 2014. Considering the IRS
is facing increasing enforcement challenges, including
implementing health care reform, and the IRS is responsible
for collecting the funds that finance every other government
agency, this doesn't seem like a wise decision.
These are only highlights of major changes recently enacted.
See your tax advisor for details about how the extender
legislation will affect you.
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Looking for more free real estate tax advice? Visit our real estate investing tax site at Realestateinvestingtax.com.
Michael Gray, CPA
2190 Stokes St. Ste. 102
FAX: (408) 998-2766