The process is referred to as "aggregation". This allows you to have multiple rental properties reported as a single entity in one column of the SCH E. Basically, each property is listed as a separate asset in the assets/depreciation section. All expenses for each expense category are entered as a single entry for each category. This includes mortgage interest, property taxes and property insurance.
This can (and will) bite you if something happens to one of the properties. For example, if a property burns to the ground, dealing with the results will be tricky depending on your desired end result of the loss. (sell without rebuilidng? Rebuild and sell? Rebuild and rent out again? Etc.)
Suppose you sell one of the properties in the group? Your carry over passive losses will not be allowed until you sell the last property in that group.
Suppose you convert one of the properties to personal use as your primary residence or 2nd home? That has a high potential of becoming yet another tax nightmare in the future with/if you sell the property, or want to convert it back to rental use again.
So before you go aggregating multiple rental properties you *REALLY* have to think it through with what your long term plans for all properties in the goup may be.
Usually, the primary reason for aggregating multiple rental properties is because you have more than 15 rentals. The TurboTax program will only generate 5 SCH E forms. With three properties max per form that means you can only report 15 individual properties. But with aggregation you can still use TurboTax and report more than 15 rentals.
I can tell you right now that if you own 3 or less rental properties and are wanting to aggregate to "justify" a QBI claim, you're just begging for an audit. If you qualify for QBI on your rental income, you qualify. Period. Weather you aggregate or not. But if you don't qualify, then aggregating and then claiming QBI is basically screaming for an audit.
Audits rarely happen right away either. They usually occur 24-36 months after your return has been processed by the IRS. It usually starts with a paper audit you get in the mail where the IRS is disputing your claim and billing you for the additional tax you owe. The letter also gives you instructions on what to do if you don't agree with the IRS, and a deadline to respond with your disagreement.If you don't respond by the deadline, then you lose. Period. There is no other recourse after that.
