Qualified Business Income

Forum|Forum|1 year ago
April 3, 2025
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I own two rental properties in an LLC. I have listed both under the "Rents and Royalties" section on Turbo Tax. I show a loss for one rental property and a gain for the other. I do not take the QBI Safe Harbor but do feel like the income is qualified. When I select "Yes" on the "Is this Qualified Business Income" question for rental property #1, my tax liability decreases. When I answer the same question the same way for rental property #2, my tax liability increases back to what it was originally essentially making zero difference on my tax return. Any idea why this is? Should I claim QBI for one rental property and not the other?

Best answer by ThomasM125

QBI will be negative if you have a loss from a QBI business. So, if the second rental is showing a loss, qualifying it as a QBI rental would reduce QBI from other business, thus reducing your QBI deduction which would increase your taxable income and associated income tax.

AmyC

Employee

If you spent the required 250 hours on a rental house to claim QBI, then you can claim it. If you do not meet the time requirements, do not claim QBI.

Reference: Can I get the QBI deduction on rental income?

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staceytcrawfordAuthor

The Turbo Tax explanation reads as the 250 hour requirement must be met to claim the Safe Harbor QBID but not to elect to be classified as a qualified business. To be a qualified business it must be classified as a trade or business, the activity must be US based, and the income must not be wages. All of these criteria are met. I am not questioning how to classify. Rather, I am questioning why classifying one rental property as a qualified business would be beneficial for me tax wise and the other have the opposite impact; therefore, having zero impact on my taxes.