Under the proposed safe harbor, a rental real estate enterprise may be treated
as a trade or business for purposes of section 199A if at least 250 hours of services are
performed each taxable year with respect to the enterprise. This includes services
performed by owners, employees, and independent contractors and time spent on
maintenance, repairs, collection of rent, payment of expenses, provision of services to
tenants, and efforts to rent the property. Hours spent by any person with respect to the
owner’s capacity as an investor, such as arranging financing, procuring property,
reviewing financial statements or reports on operations, planning, managing, or
constructing long-term capital improvements, and traveling to and from the real estate
are not considered to be hours of service with respect to the enterprise. The proposed
safe harbor also would require that separate books and records and separate bank
accounts are maintained for the rental real estate enterprise.
This safe-harbor election, if you meet its terms, means that the IRS can't challenge the QBI deduction for those rental activities. if you don't meet the 250 hours, that doesn't mean your rental activities don't qualify for the QBI.
here's a link to IRS final ruling on safe harbor
https://www.irs.gov/newsroom/irs-finalizes-safe-harbor-to-allow-rental-real-estate-to-qualify-as-a-b...
here are the regs. start on page 15. you'll note the regs are wishy-washy on what is a trade or business.
https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf
basically, if you don't meet the safe-harbor tests you are on your own for determining whether your rental activities are a trade or business.
