Not at all. The depreciable life of a rental property, after you put it into use, is 27.5 years. When you purchase it, you begin to depreciate the asset. What the prior owner did, or did not do, is immaterial. The building does not need to be new to be depreciated.
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This is half of the problem with corrupt government (aside from the corruption itself): when people in government have eyebrow-raising biographical details that “someone” can give to the New York Times at a time of their choosing, that gives “someone” a de facto role in the political system. The current Republican thinking is evidently that Turmp et al.'s corruption is OK because it’s overt, but it’s not overt; knowing a politician is for sale doesn’t mean you know who’s buying, or why.
What makes me mention that here is that there has been all this insidery Saudi-related gossip lately, and now there’s this timed release of putative dirt on Kushner, and it feels like the stupid telenovela world of international yacht-and-racehorse shitheads is bleeding into the world of proper government, in a way that it doesn’t when these guillotine-baits are confined to their gross country clubs where they belong. But who knows what the actual story is? ¯\_(ツ)_/¯ I mean, no one does, that’s the problem.
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Paying taxes is so middle-class.
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Thank you for posting knowledgeably on this subject. I’m a freelance musician, not exactly pulling in gangbuster amounts (I make like 18k a year), but it’s the same principle, and if this is a “loophole” that were closed it would fuck over small artists, well hell, small business owners, of all stripes who occasionally have to make larger dollar investments in equipment and such. This drives me nuts about the eat the rich mentality; often the same things that rich people use, poorer people use. I know it’s CoryTown and he don’t give a shit but this is a post that borders on irresponsible and I seriously wish he would retract or reframe. Kushner could be a horrible fraudster, but what’s presented in the post is nothing different than what many thousands of freelancers and small business owners, besides oligarchs, do. I plan on buying a new instrument this year, and will be doing exactly what Kushner is described as doing.
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But they could easily make a law that this “loophole” exists for the first 100,000 or first million or so. Same as how the “estate tax” has been labelled a “death tax” attacking poor struggling farmers, when instead it’s a reasonable tax on people who are passing along enormous estates to children. They could easily put in language protecting families for the first million or two, instead of the 11 million in “poor struggling farm value” they can now pocket without need to pay any sort of tax.
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Well, technically this isn’t a loophole (which is a combination of things that work together in an unanticipated way) but the code working as designed. As someone still doing a few shows a year myself, I hear you on the musician front. Frankly, $18k a year? That might not seem like much but I bow to your mastery. Even when seriously performing I never pulled that kind of cash.
What is frustrating about both the post AND the article is that it is trying to create a differentiation between money and borrowed money…where there isn’t one. It also fails to point out that depreciation SLOWS down the taking of an expense rather than allowing it to be taken all at once (unless you 179 it but that’s another issue). You borrow money, you spend it. Taking out a loan to pay for something is no different (other than the paperwork involved) than using a credit card.
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Oh yeah, “Death Tax”. What a load of crap…seriously market researched crap…but crap. All the fuss to “protect family farms” when not a single family farm had been forced to close down over estate tax in at least the past twenty years.
Step #1 - Create a problem where none exists
Step #2 - Give it a sinister nickname
Step #3 - Drum up outrage about said non-existent problem
Step #4 - Create a “solution” that does nothing but help your big money donors
Step #5 - Repeat
I cannot believe how many people still rage about the “Death Tax” without really understanding how taxation works. The whole “I earned my money I can give it to whomever I’d like” defense sort of ignores things like… Well, ya gave it to (insert store) when you made a purchase and they have to declare the income, so how is that any different?
The answer is, it isn’t. Income doesn’t need to be generated by labor. Technically, that dollar you find on the street is supposed to be reported as income but the IRS doesn’t really care too much about that (heck, the additional tax incurred by it, rounded down, would be $0).
I’d argue that the combination of deferred gain coupled with the bump up in basis truly is a loophole. There is nothing in the code that spells out that these things are meant to work together, it is just that they do. It would be easy enough to change things so that deferred gain becomes realized gain at the point of inheritance but, unless the handling of corporate deferred gain was fixed at the same time, the end result wouldn’t change…it would all just shift to corporations - which are really easy to set up.
Like I said before, even as complex as it is, there is an elegance to the US tax code that most people don’t appreciate. But, when the code fails, it generally fails in multiple routes on the same issue. Don’t even get me started on charitable trusts as a way to reduce income tax liability by spreading income out over a number of years…
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Ain’t that the truth. Think about this…adjusted for inflation, when the Federal Income Tax was introduced, the first $250k of income was exempt. The burden just continues to shift ever downwards…
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To me it feels more like a distraction. I mean, there is nothing illegal in the NYT article. Morally outrageous perhaps, but not illegal. BUT, it pulls focus away from Trump’s shady tax dealings AND the Saudi issue.
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“in the three years proceeding it”
proofreading is FUNdamental
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