Does a single family home rental qualify for the QBI deduction?

[taxitc]

The couple has property management company care for it.

[Rapid Robert]

This has been debated endlessly. It is a matter of facts and circumstances. Historically, courts have held that even a single rental unit can constitute a trade/business activity.

My prediction has always been that the IRS isn't going to spend time auditing these types of rental activities for QBI deductions. It's now been two years since the first returns claiming QBI deductions were filed, I guess we'll see whether letters start being sent to landlords about their QBI deductions.

[TaxGuyBill]

Historically, courts have held that even a single rental unit can constitute a trade/business activity.

While SOME circumstances a single rental could constitute a Trade or Business, the cases I have read all had a large amount of time and involvement in that property (lots of maintenance, repairs, improvements, etc.). I suspect that most single rentals don't come anywhere near the amount of time/involvement that those cases had, and would NOT qualify. But that is only based on the cases that I have personally read about the matter. There are also cases that ruled AGAINST a single property qualifying as a Trade or Business.

Personally, I look to requirements of the Safe Harbor as a general guide. It somewhat shows what the IRS thinks for what amount of activity could be a "Trade or Business". How far away are they from meeting the Safe Harbor (which included the 250 hour requirement)? If 200 hours of work was performed (or performed most years), I probably would claim QBI. If 50 hours were performed (or performed most years), I would not claim it. I suspect most rentals have less than 100 hours, and therefore I would be unlikely to claim QBI. Again, that is just my personal viewpoint of it.

[taxitc]

Seems like only a schd C or schd F qualifies?

[TaxGuyBill]

No, it certainly COULD qualify on Schedule E.

But in my opinion, most single residential rental properties would NOT rise to the level of a Trade or Business due to the small amount of activity involved.

[taxitc]

The tax effect would be about $200. dollars and the country is talkin trillons While SOME circumstances a single rental could constitute a Trade or Business, the cases I have read all had a large amount of time and involvement in that property (lots of maintenance, repairs, improvements, etc.). I suspect that most single rentals don't come anywhere near the amount of time/involvement that those cases had, and would NOT qualify. But that is only based on the cases that I have personally read about the matter. There are also cases that ruled AGAINST a single property qualifying as a Trade or Business.

Personally, I look to requirements of the Safe Harbor as a general guide. It somewhat shows what the IRS thinks for what amount of activity could be a "Trade or Business". How far away are they from meeting the Safe Harbor (which included the 250 hour requirement)? If 200 hours of work was performed (or performed most years), I probably would claim QBI. If 50 hours were performed (or performed most years), I would not claim it. I suspect most rentals have less than 100 hours, and therefore I would be unlikely to claim QBI. Again, that is just my personal viewpoint of it.

Instructions for form 8995-A (flow chart page 8) 2. says to me, the business be one that pays ss taxes & etc. Thanks for your replays