Tax Benefits for Same Sex Couples

Often times same sex couples are penalized when it comes to taxes.  But did you know that there are a few advantages that you can benefit from that are not available to traditional husband/wife taxpayers.

One area relates to rental properties.  Under the passive loss rules a traditional husband/wife taxpayer can deduct up the $25,000 of rental real estate losses as long as their modified adjusted gross income is less than $100,000.  If they earn more than this amount the loss deduction is suspended.  A same sex couple is considered two tax payers in the eyes of the IRS so you can each take the deduction if the rental real estate is jointly owned and your income thresholds do not exceed the modified adjusted gross income levels noted above.  This can result in saving you thousands of dollars on your taxes annually.

A second area where you can benefit is with property that has declined in value such as commercial real estate or stock investments. Partner A can sell the asset for a loss and may be permitted a tax deduction for the loss and Partner B can purchase it back at a lower cost basis.  This is not permitted with a traditional husband/wife couple as they are treated as a related party. This strategy can be complex so please be sure to work with a qualified tax preparer before you enter into a contract to sell any property.

If you have any questions or would like more information, please contact:

Loretta Manning
302-656-6632
LManning@CoverRossiter.com