Is this qualified business income? New question under the asset Rental Summary section, assets depreciation.

[chapinreyes]

The question - is this qualified business income? I have a rental property that has been rented for some time.  Last year, this question was not there.  How do I decide if the answer to this question is yes this income is QBI?  or now this income is not qualified?

Thank you!

[MinhT]

If you materially participate in the rental business, the rental income is Qualified Business Income and you should answer Yes.

[chapinreyes]

Thank you for the response.  Can you elaborate on materially participate?  I have a property manager managing the home, but I make the decisions on repairs and more?  

[MinhT]

You materially participate if you choose the tenant even with the help of the property manager and make decisions on the property.

[TaxGuyBill]

Material Participation is NOT the determining factor for QBI.  The determining factor fro QBI is if the rental rises to the level or a "Trade or Business".

Minh's comment about choosing a tenant is for "actively participate", NOT Materially Participate (which is different).

[chapinreyes]

Correct, it makes sense. So this means I participate.  So how does TurboTax determine if the rental rises to the level of a "Trade or Business"?

[TaxGuyBill]

TurboTax does not make that determination, you do.  There should be a "learn more" link somewhere in there that talks about the 250 hour "Safe Harbor" requirements.

It can be complicated and be a "gray area", which is why many in this situation go to tax professionals.