Qualified business income, or QBI, is the net income generated by any qualified trade or business under Internal Revenue Code (IRC) § 162.
Rental properties are usually treated as passive activities, and passive activities are excluded from the definition of a qualified trade or business. However, rentals that qualify as trades or businesses under IRC § 162 are not considered passive, which means they could potentially qualify for the QBI deduction.
To provide preliminary guidance to this popular question, the IRS released Notice 2019-07, the key points of which we've summarized below.
- Where do I enter income and expenses from a rental property?
- What is rental depreciation and how does it differ from an expense?
- What kinds of rental property expenses can I deduct?
- How do I handle capital improvements and depreciation for my rental?
- What can I deduct when refinancing rental property?