Possibly, it depends on the time spent on the rentals.
“Under the safe harbor, a “rental real estate enterprise” is treated as a trade or business for purposes of Sec. 199A if at least 250 hours of services are performed each tax year with respect to the enterprise. For rental real estate enterprises that have been in existence for at least four years, the 250-hour requirement will be met if, in any three of the five consecutive tax years that end with the tax year, 250 or more hours of rental services are performed per year for the rental real estate enterprise.
The IRS says these hours include services performed by owners, employees, and independent contractors and time spent on maintenance, repairs, rent collection, payment of expenses, provision of services to tenants, and efforts to rent the property. However, hours spent in the owner’s capacity as an investor, such as arranging financing, procuring property, reviewing financial statements or reports on operations, and traveling to and from the real estate, will not be considered hours of service for the enterprise.”
And
“The safe harbor requires that separate books and records be maintained for the rental real estate enterprise. Property leased under a triple net lease or used by the taxpayer (including an owner or beneficiary of a relevant passthrough entity) as a residence under Sec. 280A(d) would not be eligible under the safe harbor.
Other requirements in the safe harbor are:
You probably do qualify for QBI with four rental properties. While it's possible you would not, I would be surprised if you did not. See Revenue Procedure 2019-38 at https://www.irs.gov/pub/irs-drop/rp-19-38.pdf if you want some kind of confirmation. Just keep in mind that the "trade or business" classification is for QBI purposes ONLY, and nothing else. The income, expenses and losses are still passive for just about all other purposes.
I myself have three rental properties and just flat out do not qualify.
Possibly, it depends on the time spent on the rentals.
“Under the safe harbor, a “rental real estate enterprise” is treated as a trade or business for purposes of Sec. 199A if at least 250 hours of services are performed each tax year with respect to the enterprise. For rental real estate enterprises that have been in existence for at least four years, the 250-hour requirement will be met if, in any three of the five consecutive tax years that end with the tax year, 250 or more hours of rental services are performed per year for the rental real estate enterprise.
The IRS says these hours include services performed by owners, employees, and independent contractors and time spent on maintenance, repairs, rent collection, payment of expenses, provision of services to tenants, and efforts to rent the property. However, hours spent in the owner’s capacity as an investor, such as arranging financing, procuring property, reviewing financial statements or reports on operations, and traveling to and from the real estate, will not be considered hours of service for the enterprise.”
And
“The safe harbor requires that separate books and records be maintained for the rental real estate enterprise. Property leased under a triple net lease or used by the taxpayer (including an owner or beneficiary of a relevant passthrough entity) as a residence under Sec. 280A(d) would not be eligible under the safe harbor.
Other requirements in the safe harbor are:
I like Kris's response better. 🙂 Just one note of clarification.
if at least 250 hours of services are performed each tax year with respect to the enterprise.
The services do not have to be provided directly by the owner. They can be provided by another entity contracted and paid by that owner to perform those services. If you paid a property manager to provide those services, that's the same as you personally providing those services. The 250 hours can be tricky. Just make sure you have the documentation to prove it, in case you're ever audited.
I myself have three rentals, and even if I have all three rentals go empty in the same tax year, (meaning I "do work/provided services getting property ready for the next tenant) I can't even break 100 hours. So for me, 250 hours in a single tax year, even among all three properties combined, is just never going to happen.