QBI and Rental

[Kram BergGold]

Do you think a QBI deduction applies to a vacation home with positive income. How about a single room rental in a principal residence with positive income?
In both cases deductions are prorated due to personal use.

[ttbtaxes]

Given the 250-hour, bright-line test the IRS threw down recently I would tread water very carefully. Either the client has to sign an affirmation of meeting the 250-hour test under penalties of perjury, which gets attached or the return, or is silent about it. I'm sure a taxpayer with a rental property (s) that claims the QBID on its profit and doesn't attach the required affirmation will move up on the audit list.

Having said that, if they provide substantial services and are more akin to a hotel than a rental property than maybe they can qualify. That may lead to other issues such as did they register with the state/county and collect hotel, occupancy, and sales tax.

Let's also not lose sight of the penalty for those who claim a QBID that is disallowed.

[Burke]

?
In both cases deductions are prorated due to personal use.

It is my understanding that ANY personal use negates the QBI.

[TomJ]

No QBI for vacation homes if there is personal use. Room rental could be different if it is never used by the owner and is rented full-year. I haven't seen any interpretations on that. I have a client that rents his basement with separate entry via AirBnB, as if it's a separate building with no personal use. I think that's definitely QBI.

[tomthomas]

Don't lose sight---it must be for business.