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Home rental income: QBI or non-QBI?

Forum|Forum|5 years ago
July 7, 2020
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I have renters renting my home. The home was rented to tenants all of 2019.

====> what does one need to look at to decide if the income from the home rental is considered QBI ?

Best answer by VictoriaD75

The tax law provides a safe-harbor under which income from rental real estate (even if treated as passive) can qualify as qualified business income (QBI). The requirements are:

250 hours or more are spent by the taxpayer with respect to the rental activity
Contemporaneous records of the time are maintained
Separate books and records for the rental activity are maintained

Time spent related to the rental activity on advertising, negotiating with tenants, verifying applications, daily operation, repair and maintenance, purchase of materials, and supervision of employees all count toward the required 250 hours. Time spent purchasing or financing the acquisition of the property and time spent traveling to and from the property do not generally qualify.

QBI on Rental Income

VictoriaD75Answer

The tax law provides a safe-harbor under which income from rental real estate (even if treated as passive) can qualify as qualified business income (QBI). The requirements are:

250 hours or more are spent by the taxpayer with respect to the rental activity
Contemporaneous records of the time are maintained
Separate books and records for the rental activity are maintained

Time spent related to the rental activity on advertising, negotiating with tenants, verifying applications, daily operation, repair and maintenance, purchase of materials, and supervision of employees all count toward the required 250 hours. Time spent purchasing or financing the acquisition of the property and time spent traveling to and from the property do not generally qualify.

QBI on Rental Income

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C

chapinreyesAuthor

What if you have a property management company managing the home/tenants?

VictoriaD75

That is not considered your time spent. You can deduct the cost of the property management company, but their work does not count as hours for the safe harbor election. All of the above conditions must apply to qualify a rental for the QBI deduction.

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