The Qualified Business Income deduction (QBI) is a deduction that lets you claim up to 20% of your qualified business income from federal income tax. What is happening is that when you enter the depreciation, the QBI will go down if your rental income goes down, and this could make your taxes go up.
Even if you loose the QBI deduction, you should enter all the assets that you have in your rental property under depreciation. Depreciation is the process that you will use to deduct the cost of your property. Even if you do not take it, you will have to reduce your basis when you sell the property. This means that if you have rented the property for a few years and you decide to sell it, even if you did not depreciate it, you will have to reduce your cost basis by the depreciation you did not take. For more information about depreciation see the TurboTax help article below:
To go back through your rental property entries and review your depreciation:
- Open or continue your return, if you haven’t already.
- Locate the Search bar in the upper right of your screen
- Search for rentals and select the Jump to link at the top of the search results.
- Answer Yes to the question Did you have any income from rentals or royalties?
- On the screen What are you here to report?, select Rental property and Continue
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