Two rental properties have net loss and two have net income. If you take QBI deduction for the two net income properties, do I have to take QBI for the other two homes?

[sevi12]

If I select "Yes, this income is QBI" for the homes with the net loss, I notice my taxes go up so that is why I am asking.   All are single family homes rented out the full year at fair market rates and I actively manage all four properties (handle repairs, finding new tenants, leases, etc). Homes are all owned by me in sole ownership and I don't have a property management company.    I keep individual records across each property (separate bank accounts, receipts, book keeping, etc).  I keep general activity information, dates, cost, etc but I don't keep records around time (how long it took me or someone else to perform activity) so I can't say definitively I spend 250 hours on each home individually.   If you combine all activities across the four rental homes, without question, I spend at least 250 hours per year managing the properties.  

[DanielV01 · Accepted solution]

Yes you need to include them.  The IRS will want consistent accounting.  If the properties that have a gain qualify for QBI, then the rental properties that have a loss reduce your rental gains that can qualify for the QBI deduction.  Because you are determining that your rentals are a business venture, you are able to report expenses (and even have a reportable loss) through Schedule E.  If, on the other hand, you were to determine that your rental is not a qualified trade or business, you are also stating it is not a for-profit activity and you would not be allowed to claim expenses or take a loss.  And being able to claim the expenses on your return is more valuable from a tax standpoint than losing some QBI because you have to include the loss in your calculation.