I am also confused with the QBI and “Safe harbor” ARE THEY RELATED?
Not at all really. QBI=Qualified Business Income deduction. Typically, this was initially intended for small business owners who typically report business income/expenses on SCH C. Though it does apply to corporations in a way I don't understand, also. Things are a bit screwy (in my opinion) when it comes to applying it to residential rental real estate reported on SCH E.
One of the issues I've seen, is where the term "safe harbor" is used for both the "safe harbor di-minimus" act, and for the separate "Qualified Business Income" deduction. In my opinion, that just adds to the potential for confusion and misunderstanding. On top of that, the requirements to qualify for the Safe Harbor di-minimus so you can deduct the cost of certain assets that would otherwise be depreciated, are different from the requirements for the QBI deduction.
I've seen where most who take the QBI deduction don't (in my opinion) come anywhere close to qualifying. But in the end, it's not my call for others. They make their own call and if questioned about it by the IRS, they are the one's who have to answer. Not me.
I myself have three rental properties. One of the requirements for QBI is that 250 or more hours of rental services are performed for each rental, or if combined into a single enterprise, for each enterprise. Now with all three of my rentals combined, I can't even manage 100 hours in a tax year. Note that "rental services" does not include my book keeping time. Rental services means just that - "RENTAL SERVICES". Yes, I may fix a leaky sink or broken toilet here and there. But again, that doesn't get me anywhere close to the 250 hours requirement. Since I screen prospective renters very tightly, I don't have a high turnover rate either. I may have a property go vacant on average, once every 3 years.
Another requirement for QBI is the maintaining of separate books for each rental property or enterprise. Not gonna do it, since I already know I can't meet the 250 hours requirement.
You can read more about QBI at https://anderscpa.com/rental-real-estate-qualify-for-qbi-deduction/?tag=re&c, but that's not an "official" website that I would go by. However, the general information provided is correct in the context presented, as far as I can tell.
Now for the Safe Harbor di-minimis where you can expense some assets that would otherwise be depreciated, if certain conditions are met, many folks use the SH without being fully cognizant of the rules and requirements. Therefore, a fair number of those who use SH, actually don't qualify.
For example, in the past one needed to have an "applicable financial statement" as one of the requirements for SH. But as of 2018 tax payers could claim up to $2500 per invoice or item for taxpayers without applicable financial statements. More than that, you'll need to provide an applicable financial statement (AFS) if questioned/audited on the claim.
I personally don't know a single rental property owner that maintains any type of "financial statement" as it relates to their rentals, must less an "applicable" financial statement. Now that doesn't mean their aren't any that don't. I'm just saying I don't know any.
Now I got my information for the SH from the IRS website at https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ad...
