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Level 3
posted Mar 25, 2023 2:09:53 PM

Is it easy to qualify for QBI deduction with more than 10 rental properties?

The help indicates that qualifying for QBI for rental properties can be a grey area if you are a mom and pop investor with 1-2 properties. But does having more than 10 rental properties make qualifying for QBI a slam dunk (much easier)? I have 13 rental properties managed by property managers - they coordinate the repairs/maintenance/tenant selection with my input.

 

Thank you for your response

0 2 683
2 Replies
Level 15
Mar 25, 2023 3:37:30 PM

It seems likely that it would qualify as a "Trade or Business", and therefore qualify for QBI.

 

But if your rentals show a tax-loss, that may not be a good thing.

Level 15
Mar 25, 2023 5:57:04 PM

have you checked the rules for real estate professionals? for them by definition income/loss is not passive and then they automatically qualify as a business.

https://www.fortunebuilders.com/real-estate-professional/ 

even if you don't qualify as a REP there are safe harbor rules which if met would prevent the IRS from challenging the QBI deduction 

https://www.journalofaccountancy.com/news/2019/sep/rental-real-estate-safe-harbor-qbi-deduction-201922135.html#:~:text=The%20IRS%20on%20Tuesday%20issued%20a%20revenue%20procedure,meets%20that%20definition%20under%20the%20Sec.%20199A%20regulations.