Qualified business income is the net taxable income from a qualified trade or business. Rental properties are usually treated as passive activities, and passive activities are excluded from the definition of a qualified trade or business. However, rentals that qualify as trades or businesses under IRC § 162 are not considered passive, which means they could potentially qualify for the QBI deduction.
There are various reasons you might not be getting QBI such as:
- The rental property is showing a loss and not income
- You may not receive a full 20% of QBI deduction is that the overall deduction cannot exceed 20% of your taxable income after subtracting out capital gains.
- If you–the taxpayer and business owner–use the property for yourself during part of the year, then any income you receive from renting that property isn’t QBI. This means you can’t use the property as your second home or vacation home.
- If the property is on a triple-net lease (NNN), which means the tenant is paying for the maintenance, insurance, and property taxes on top of their monthly rent, then the income from the property isn’t QBI.
Take a look to see if the property you are having an issue with is set identically to the others. Perhaps do a side-by-side review of that property by comparing it to your input in your 2021 return.
The IRS released Notice 2019-07, the key points are summarized in the link below:
QBI deduction on rental income
See IRS Guidance below for additional helpful information.
QBI
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