I am trying to claim the qualified business deduction for my real estate properties but do not qualify as a real estate professional. We meet the qualifications for QBI (250 hours) but not for real estate professional (750 hours) If I un-click the real estate professional box TurboTax doesn’t allow me to claim the deduction. Everything I’ve read says you don’t have to qualify as a real estate professional to qualify for QBI????
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in the step-by-step process, you should come to a set of questions one asks about safe harbor - you need to check that box. safe harbor means you spent the 250 hours and are attesting to other items that are in the election.
I did but it won’t allow me to claim the deduction unless I have checked the real estate professional criteria as well. As soon as I un-check the 750 hour and 50% of my time spent the deduction goes away.
Double check the forms ... does the actual QBI deduction on Line 13 of Form 1040 go away? And to confirm, you have indicated that the rentals qualify for QBI?
Yes. The deduction is 0. It actually says 0 whether I check the real estate boxes or not but my refund goes from a negative amount to a positive when I check the real estate boxes. My real estate meets all the qualifications for safe harbor and QBI.
I noticed that the deduction is subtracted on Form 1040/1040SR on line 8 but this deduction goes away if I uncheck the real estate box.
is active participation also checked on schedule E worksheet?
the other possibility is that you need to complete the QBI section on the schedule E worksheet.
That has nothing to do with QBI.
You are seeing that the rental loss is not being allowed for a non-professional. That is quite common. Two requirements to be allowed a passive rental loss is (a) you must "Actively Participate" in the rental, and your modified AGI on your tax return must be under $150,000 (it may be $75,000 if filing as MFS). Otherwise, the loss is carried forward to next year (see Form 8582),
Yes. Active participation is checked and the QBI information is complete. The allowable deduction just drops to 0 as soon as I uncheck the real estate professional information
Everything I have read says that you don’t have to qualify as a real estate professional to get the deduction. My income is higher than the 150,000 but these properties meet the criteria for safe harbor and QBI without qualifying as a real estate professional. The income requirement isn’t attached to safe harbor
As I said before, what you are seeing has nothing to do with QBI. And you don't get a QBI deduction for a LOSS.
So putting the QBI to the side, as I said before, rental losses are PASSIVE losses, and if your income is over $150,000, you are not able to claim a Passive Loss.
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