How the Inflation Reduction Act of 2022 impacts landlords

August 10, 2022
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On August 7, 2022, the United States Senate passed the Inflation Reduction Act of 2022. Given the lengthy negotiations and compromises already accounted for in this bill, experts expect this bill to pass the House of Representatives after they reconvene on August 12, 2022.

It's massive as it pertains to $370 billion worth of spending, largely impacting energy & climate and healthcare. As it's a bill with huge tax credits, increases in IRS enforcement, and more, this certainly caught our eye.

The Nophin team took a look at the bill and early analyses. We're excited to unpack some of the details in the bill and how you should think about the bill in the context of your investment properties.

Keep in mind, this post is intended to be informational and does not debate the political merits of this bill. We'll try our best to keep this post updated as we learn more about the implications.

What's in the bill?

The bill is huge so we've selected a few notable provisions we think may be interesting to Nophin clients:

  • 15% Corporate Minimum Tax - Any corporation (including Real Estate Investment Trusts) with more than $1 billion in book income will now be subject to a minimum 15% corporate tax rates.
  • Increased IRS enforcement - Roughly $80 billion of the bill's spending will go to the Internal Revenue Service (IRS) where they expect to hire more than 86,000 IRS agents.
  • Nonbusiness energy property credit - If you're house-hacking, you may be able to use the 30% credit for solar reserved for residential homeowners.
  • High-efficiency electric home rebate program - Up to $1,750 for heat pump water heater, $8000 for heat pump for space heating and cooling, $840 for electric stoves, $4,000 for electrical panel upgrades, and more with a maximum of $14,000 in credits. These credits are available for multifamily operators if more than 50% of residents are considered low or moderate income households.
  • Whole building retrofitting - Affordable housing multifamily operators can qualify for $4,000 per unit and $400,000 per building in rebates if models can show concrete energy savings.
  • Domestic content bonus credits - Property developers may be keen to know that certain projects may be eligible for bonus credits if steel, iron, and manufactured products are produced domestically.

Why this matters

Technology is now crucial in your journey as a property investor. With the increase in IRS agents, you may want to use software that automatically keeps track of your expenses and tax obligations. With the large quantity of tax credits available, technology again can help you maximize your deductions.

Nophin is the technology partner that helps you manage your real estate finances. This means everything is organized and tax season can be a breeze.

  • Nophin keeps track of your expenses, automatically with smart, one-click categorization and machine learning that gets smarter over time. Nophin eliminates the need for manual Schedule E reconciliations.
  • Nophin lets you open an unlimited number of bank accounts for each of your units and properties. Know exactly where your money is going and store safely in FDIC-insurance eligible accounts. 
  • Coming soon: Collect rent and make sure your expenses (and income!) are organized properly.
  • Coming soon: Keep track of your tax obligations and don't worry about coming up short during tax day.

Help us build a landlord-focused bank you'd be proud to call your own.

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Please note: Nothing above should be construed as legal, investment, tax, nor financial advice. This content is for informational purposes only. Consult a lawyer and/or an accountant if the above is right for your personal situation.

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