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Returning Member
posted Jul 7, 2020 8:13:22 AM

Rental loss and QBI

Hi:

I have three rental units and two of them are at loss. The combined income would be loss as well. Is there any benefit to qualify QBI in this case?

Thanks!

Harry

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2 Replies
Level 15
Jul 7, 2020 8:39:05 AM

With only three rental properties, I seriously doubt your qualify for the QBI - but you could.

I myself have three rental properties and don't come anywhere even "close" to the 250 hours of "directly involved" requirement. I even had a rental go empty last year and did all the turn around work myself to prepare it for the next rental. Even with that, and with all three rental properties combined my "directly involvement" in my rental properties did not exceed 100 hours for the year.

Also, it is quite common for long term residential rental real estate to operate at a loss every year "on paper" at tax filing time. Especially if there's a mortgage on the property(s). So if by some long shot chance you do qualify for the QBI, it's of no value to you "right now" because your rental losses that exceed the rental income are just carried over. So it makes no difference on your tax liability.

What I don't know is how QBI can possibly be of any benefit in the future, if your rentals show a loss every year as expected, on paper at tax filing time. I've never researched it that far since I don't qualify for the QBI anyway.

 

 

Returning Member
Jul 7, 2020 12:58:57 PM

Thank you for sharing your personal situation, which wasn't asked for. Knowing that you also 3 units really help a lot in predicting my experience. It's a long shot that you know me personally to come to such conclusion, but you could.