Does my single family rental property qualify as QBI (Qualified Business Income)?

[danhilde]

I have a house that I have been renting for a number of years.  I use a property manager to manage the rental.  TT is asking me whether my rental is a business or an investment.  If it is a business, then it qualifies as QBI.  The difference between business (QBI) and investment (not QBI) is vague to me.  Any advice would be much appreciated.

[ColeenD3]

Qualified business income, or QBI, is the net income generated by any qualified trade or business under Internal Revenue Code (IRC) § 162.

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.

To provide preliminary guidance to this popular question, the IRS released Notice 2019-07, the key points of which we've summarized below.

Exclusions

Real Estate Professionals

Everybody Else

QBI for rentals

[danhilde]

Thank you, ColeenD3.