The QJV election is not supported by TurboTax (particularly the online versions - see screenshot).
You should aware that you and your spouse must each materially participate as the only members of a jointly owned and operated rental real estate business in order to qualify for QJV status.
on the schedule E input screen check item E
let me point out that if you hold the real estate in a LLC or limited partnership you are not suppose to use the QJV option. the IRS actually wants you to file a partnership return. A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company). the IRS can impose penalties for failure to file a partnership return in this case.
if it is not an LLC or LP or other state law entity and thus qualify for the QJV option
Making the election. To make this election for your rental real estate business, check the "QJV" box on line 2 for each property that is part of the qualified joint venture. You must divide all items of income, gain, loss, deduction, and credit attributable to the rental real estate business between you and your spouse in accordance with your respective interests in the venture. Each of you must report your interest as separate properties on line 1 of Schedule E. On lines 3 through 22 for each separate property interest, you must enter your share of the applicable income, deduction, or loss
on the schedule E input screen check item E
That is not possible in the online version, which the OP appears to be using. The only way to accomplish this election would be with a desktop version of TurboTax in Forms Mode.
Thanks for the reply. Yes, this is not held through an LLC. We jointly owned the home as our primary residence, but moved during the year and converted it into a rental property at that point. I believe I'm going to have to finish everything else and then file this manually, unfortunately.
I'm thinking I can go ahead and enter everything into the online return, listing the property twice as 50% interest in the address list on Schedule E, then entering the items of income and expense split between us. Then I'll just have to print out the return in order to actually check the QJV box. The mortgage is in my husband's name only, but since the property is titled to both of us, I believe there's no way to avoid this election. (We have another rental property that's held in my name only, so we've never had to deal with splitting things up before.) Thanks for your help!
(We have another rental property that's held in my name only, so we've never had to deal with splitting things up before.) Thanks for your help!
You are most welcome, but I wanted to make this very clear: You do not need to make a QJV election just because you jointly own this rental property with your spouse. Mere joint ownership of property does not create some sort of de facto partnership.
In order to make the election, you need to materially participate in the rental to the extent that it is essentially considered a business and that is a rather high standard - most rentals are passive activities and do not require such a high level of involvement.
The more I read the rules on this, the less clear it becomes.
Fact pattern I'm following - Schedule E instructions
Qualified Joint Venture
"If you and your spouse each materially participate (see Material participation in the Instructions for Schedule C) as the only members of a jointly owned and operated rental real estate business". I think we meet test 2 (and 3) - our participation was substantially all of the participation, and in total we definitely put over 100 hours into the rental. Also, I believe we do qualify for QBI deduction since we do meet the qualifications under Rev Proc 2019-38.
Facts on other side - we don't participate over 500 hours, and do not qualify as real estate professionals.
Essentially, I want to be sure I elect this if I need to, but don't want to go to the effort of splitting it up if that is unnecessary. It seems to me that if it wasn't for the QBI considerations, it would be best to take this as passive income (which is of course how it is treated anyway). However, with those also at play here, I don't want to contradict the presumption that this is a trade or business by NOT electing QJV if I should check it.
(To further compound matters, we moved to a small farm and DO need to split the income and expenses from the farm 50/50 by filing 2 Schedule Fs for 2018...what a year this is!!!)
It seems to me that if it wasn't for the QBI considerations, it would be best to take this as passive income (which is of course how it is treated anyway). However, with those also at play here, I don't want to contradict the presumption that this is a trade or business by NOT electing QJV if I should check it.
Bear in mind that the Rev. Proc. specifically states, "If the safe harbor requirements are met, the rental real estate enterprise will be treated as a single trade or business as defined in section 199A(d) for purposes of applying the regulations under section 199A".
Typically, when you see that language, you can be reasonably certain that the treatment (as a trade or business in this instance) is solely for the purposes of applying a particular statute or regulation and not for other purposes.