The safe harbor was first introduced to clarify the expectation for real estate rentals in early 2019. They are placed here for your convenience. the 100% rental use is not as much of a factor as whether this would be considered a 'trade or business' for QBID. Review the rules below to make your decision for your rental property.
The IRS finalized the safe harbor rules for rental properties.
This safe harbor is available for taxpayers who seek to claim the section 199A deduction with respect to a "rental real estate enterprise." Solely for purposes of this safe harbor, a rental real estate enterprise is defined as an interest in real property held to generate rental or lease income. It may consist of an interest in a single property or interests in multiple properties. The taxpayer or a relevant passthrough entity (RPE) relying on this revenue procedure must hold each interest directly or through an entity disregarded as an entity separate from its owner, such as a limited liability company with a single member.
The following requirements must be met by taxpayers or RPEs to qualify for this safe harbor:
- Separate books and records are maintained to reflect income and expenses for each rental real estate enterprise.
- For rental real estate enterprises that have been in existence less than four years, 250 or more hours of rental services are performed per year. For other rental real estate enterprises, 250 or more hours of rental services are performed in at least three of the past five years.
- The taxpayer maintains contemporaneous records, including time reports, logs, or similar documents, regarding the following: hours of all services performed; description of all services performed; dates on which such services were performed; and who performed the services.
- The taxpayer or RPE attaches a statement to the return filed for the tax year(s) the safe harbor is relied upon.
- Can I get QBID for my rental income?
- To change the answer or review your selections you can use the steps below.
- Open your TurboTax return > Search (upper right) type rentals > Press enter > Click the Jump to ... link
- Edit next to your rental activity > Scroll to Qualified Business Income > Edit/Update > Continue to answer the questions
- Make your selection based on your decision considering your facts and circumstances
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