Okay I think I finally get it. Our net rental income ($2500, summed up on form 8825) doesn't count as "business income" or QBI, mainly because we can't document 250 hours of work last year in support of the business. Our net business income is $0 even though our net rental income is $2500. We can't deduct anything since the deduction is limited to net *business* income. Better to take the heat pump cost as depreciation since at least that way we'll get something to lower taxes. (Don't get me started on my rant about heat pumps, which last 10-20 years, being required to go on a 39-year depreciation schedule!)
