QBI deduction for 3 rentals; Should they be treated as "combined business"?

Forum|Forum|2 years ago
February 7, 2024
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I have 3 rental properties and after entering expenses, there is a question "Should this business be treated as part of a combined business" and gives me a choice of #1) my name or #2)this business is independent of any other activities". Which option should I choose to get maximum QBI deduction?

Best answer by PatriciaV

In general, once the election is made to combine rental properties into an enterprise, the election is binding for future tax years.

ThomasM125

You would have to try it both ways to be sure. However, if your 2023 taxable income is less than $182,100 (filing single) or $364,200 (filing joint), there would be no advantage to combing the businesses for purposes of the qualified business income deduction (QBI). When your income is under those amounts, your QBI is not limited by wage or basis of asset considerations, which is why you would want to combine the businesses. You can read more here: Combining businesses for QBI purposes

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optca50Author

Thank you for your response and the link. I think I recall combining the rental properties last year. Does that mean I'm obligated to combine them in subsequent years?