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March 15, 2020
Question

How do I determine if my rental property qualifies as a trade or business?

  • March 15, 2020
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1 reply

Carl11_2
Employee
March 15, 2020

It is not common for residential rental real estate to qualify as a trade or business. It's best to start with the easy stuff first.

Each property or each group of aggregated properties has to qualify on it's own. If you do not spend at least 750 hours a year (15 hours a week) directly involved in the management of the property, then it doesn't qualify as a trade or business. Time spent doing the book keeping does not count for this determination.

Rental income must provide more than half of your support.

I myself have 3 rental properties and even with all three combined I don't come anywhere close to qualifying. Even in a tax year when I have a rental go empty and it takes me about a week to turn it around for the next renter, I still can't exceed 100 hours total for the entire year with all three properties combined.