TCJA Interest Expense Limitation: Affordable Housing Partnerships Have Interesting Decision Regarding Depreciation
The Tax Cuts and Jobs Act (TCJA), signed into law in December 2017, provides new rules limiting the deduction of business interest expense for tax years beginning after December 31, 2017. A taxpayer’s annual deduction for business interest expense is limited to the sum of:
- The taxpayer’s business interest income for the tax year
- 30% of the taxpayer’s Adjusted Taxable Income
- The taxpayer’s floor plan financing interest (not applicable to affordable housing)
The limitation applies to all taxpayers, except for certain small business taxpayers that meet the gross receipts test, and to certain trades or businesses that are excluded.
What does this have to do with depreciation? Read on to find out.