Rental properties QBI qualification

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Situation:

1. I have several rental properties (for over 3 years)

2. I own them myself (no business). 

3. I have a management company that takes care of everything (which keep income/expense records per property AND spends at least 250 hours managing ALL the properties) 

4. I assume i'm considered as "actively participating ..." 

5. Income wise, i'm below the IRS threshold ... so technically , i qualify for QBI

6. I have never taken QBI deduction before

Question:

Am i qualified to take QBI ?

[PatriciaV · Accepted solution]

TurboTax can help you determine if you qualify for QBI in the Rental Property section of the program. Simply work through the interview screens and answer all the questions. Take note of "learn more" links that may provide more detailed information.

To take the QBI safe harbor, you must have:

For a single property
 1. Performed rental services for at least 250 hours (you or someone you hired)
 2. Kept separate books and records showing income and expenses
 3. Didn't use it as your residence
 4. Didn't lease the property under a triple net lease
 5. Didn't rent the property to a commonly controlled business.

For an enterprise
 1. Met criteria 1-5 above, but for the whole enterprise, AND either of the following,
 2. Combined into the enterprise either all residential or all commercial properties,
 OR
 3. Combined all properties in a single, mixed-use building of residential and commercial properties
 

The five criteria for the safe harbor above are a way of qualifying your rental property as QBI that lowers your audit risk.

You can also qualify for QBI with other criteria without taking the safe harbor. In fact, if you select No on this screen, we'll ask if you'd like to qualify as a business next. That qualification is easier to get but more open to audits by the IRS; you lose the safe part of the safe harbor.