QBI question about deduction for multiple properties

[VirtualTed]

Hello there!

I'm getting ready to submit taxes and I have a question about the QBI deduction.   I have 5 rentals total.  After depreciation and other expenses my income looks like this...

Rental 1 - $4.400
Rental 2 - $5,400
Rental 3 - $5,400
Rental 4 - $6,700
Rental 5 - ($8,500)

Rental 5 was purchased late in the year and after a ton of repairs, I was $8,500 in the hole after getting a renter in around December.   These are all the same type of single-family homes (residential).

My question is, must I include all 5 rentals as a "Real Estate Enterprise" or can I just include Rentals 1 through 4?  If I include #5 in the same package of properties, then I end up losing a good chunk of money as it weighs down the other 4 and the 20% discount I get as part of the QBI discount.  Do I need to include #5 at all?   The difference is about $600 on my taxes.

Thanks, and take care.

-T

[AmeliesUncle]

Yes.  It is all-or-nothing.

Once a taxpayer or RPE treats interests in similar commercial properties or similar residential properties as a single rental real estate enterprise under the safeharbor , the taxpayer or RPE must continue to treat interests in all similar properties, including newly acquired properties, as a single rental real estate enterprise when the
taxpayer or RPE continues to rely on the safe harbor. However, a taxpayer or RPE that chooses to treat its interest in each residential or commercial property as a separate rental real estate enterprise may choose to treat its interests in all similar commercial or all similar residential properties as a single rental real estate enterprise in a future year.

https://www.irs.gov/pub/irs-drop/rp-19-38.pdf

However, you also need to consider if your "repairs" are valid.  Expenses BEFORE it was available for rent are part of your Basis for depreciation.  They are NOT deductible as "repairs".

[Critter-3]

I agree ... all the repairs made prior to the property being available for rent should be added to the basis for depreciation ....    purchase price + cost to purchase + repairs  = basis. 

[VirtualTed]

Thanks guys!   This was very helpful.

-T