QBI without being a real estate professional

[Epetach]

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????

[Mike9241]

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. 

[Epetach]

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.

[AmeliesUncle]

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?

[Epetach]

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.

[Epetach]

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.

[Mike9241]

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. 

[AmeliesUncle]

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),

[Epetach]

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 

[Epetach]

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

[AmeliesUncle]

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.