rental real estate activities may not be a trade or business. if they are not then the section 199A treatment is not available to them. the code. regs and notice 2019-38 provide a safe harbor. if the provisions contained in the notice are met and the taxpayer makes the safe harbor election (required each year) the real estate activities are a trade or business and the IRS can not challenge this. to meet the safe harbor tests taxpayers are allowed to aggregate all residential rental real estate as a single business and/or aggregate all commercial rental real estate as a single business. once aggregation is elected it must be done every year and new properties must be included.
certain real estate activities are not eligible for the safe harbor
1) triple net lease property
2) property used by the taxpayer as a residence for any part of a year
3) real estate rented to a trade or business conducted by a taxpayer or a relevant pass-through entity (RPE) which is commonly controlled. example: taxpayer owns an S-Corp that runs a grocery store. taxpayer, through a single member LLC, owns the building that the grocery store rents
4) the entire rental real estate interest is treated as a Specified Service Trade or Business (SSTB)
this is an overview and I suggest you read the REV-PROC in its entirety to see if you have questions.
if you aggregate the two rental activities you have. then only one k-1 is used to report line 2 and any other relevant lines from the k-1 and the summation of the 199A rental info
otherwise separate k-1s are needed for line 2, other relevant lines like AMT and the 199A info
https://www.irs.gov/pub/irs-drop/rp-19-38.pdf
