Solved: Qualified Business Income - Do I qualify?
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Qualified Business Income - Do I qualify?

Hello - I purchased my first property in 2020, it's a duplex.  I live in 1 unit and I rent the other unit. I take care of all the property management (listing, screening, repairs, rental collection etc).  Would I qualify for the pass through deduction?

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Level 15

Qualified Business Income - Do I qualify?


@onew1n wrote:

Would I qualify for the pass through deduction?


Clearly not with respect to the unit in which you reside and probably not with respect to the rental unit. 

 

The IRS has a safe harbor for rental real estate to qualify for the Section 199A deduction and the requirements are outlined in the Rev. Pro. at the link below.

 

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

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2 Replies
Level 15

Qualified Business Income - Do I qualify?


@onew1n wrote:

Would I qualify for the pass through deduction?


Clearly not with respect to the unit in which you reside and probably not with respect to the rental unit. 

 

The IRS has a safe harbor for rental real estate to qualify for the Section 199A deduction and the requirements are outlined in the Rev. Pro. at the link below.

 

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

View solution in original post

Level 3

Qualified Business Income - Do I qualify?

safe harbor - all this means is that if you meet them the IRS can not disqualify you. if you don't meet them at your own risk you cn take the deduction.   the 250 hours not only include hours you put in but also the hours of a subcontractor/business for things like repairs to rental unit.  common expenses like hours spent by roofer or gardener would need to be prorated. 

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