Investors & landlords

Some comments on this matter:

• This is not really an area that can be addressed in a forum such as this.  This question is very fact specific and really needs to be handled one on one with a tax professional.
• Having said that, in general, rentals are not a trade or business; defined as a Section 162 trade or business.  Yes, some are able to support that they do qualify as a trade or business, but you can count on this being a red flag with the IRS.  This is a contentious area for the IRS.
• Factors that need to be reviewed are; the type of property (commercial vs residential), the number of properties rented, the day-to-day involvement of the owner, the type of rental (net lease, traditional lease, short-term, long-term) and other factors.
• The proposed regulations do not provide much additional support, however, they are clear that in one special case situation direct real estate investment automatically counts as a trade or business. This occurs when someone rents property to another trade or business they own at least 50 percent of that "other trade or business".  For example; let's say you own a building and you rent this building to a corporation or partnership. If you own at least 50% that entity and it operates a trade or business, your rental property will be considered  a trade or business and qualify for the QBID.
• Adding to the lack of additional support (new support) the House Bill was not adopted by the Conference Agreement.  Neither the Conference Agreement or the Senate Amendment of the Committee Reports discuss the meaning of a "trade or business".  Essentially we are just left with "old" prior law (which is not much) and case law.
• Edited 1/19/2019.  See Notice 2019-07 for guidance on this issue.