What is a "Real Estate Enterprise group"?

[dtvedt1965]

This is an error on my schedule E worksheet.  It says I need a group number and that needs additional properties added to it.  How do I fix this?  I tried the instructions, but it is not that simple.  No matter what I do this error keeps haunting me and not letting me file.

[JohnB5677]

I think you're referring to an Enterprise Zone. 

Enterprise zones are designated areas of land in which businesses can receive tax incentives in the form of tax exemptions on eligible new investment, when the investment is made in conjunction with a project that includes job creation.

[Grimloktt]

I do not believe the poster is asking about zone.  I, too, just received the same error message.  It states, "Schedule E Worksheet: Real Estate Enterprise Group Number - Real Estate Enterprise #1 needs additional properties on it.  Add additional properties to Statement #1 or change which Statement this property is report on."

Then, it says "Real Estate ent group _______".

Thoughts?

[Cynthiad66]

This has to do with the Qualified Business Income (QBI) deduction

Under the proposed safe harbor, a “rental real estate enterprise” would be treated as a trade or business for purposes of Sec. 199A if at least 250 hours of services are performed each tax year with respect to the enterprise. The IRS says this includes services performed by owners, employees, and independent contractors and time spent on maintenance, repairs, rent collection, payment of expenses, provision of services to tenants, and efforts to rent the property. However, hours spent in the owner’s capacity as an investor, such as arranging financing, procuring property, reviewing financial statements or reports on operations, and traveling to and from the real estate will not be considered hours of service with respect to the enterprise.

A rental real estate enterprise is defined, for purposes of the safe harbor, as an interest in real property held for the production of rents. A rental real estate enterprise may consist of multiple properties. The interest must be held directly or through a disregarded entity. Taxpayers either must treat each property held for the production of rents as a separate enterprise or must treat all similar properties held for the production of rents as a single enterprise. Commercial and residential real estate cannot be combined in the same enterprise.

The proposed safe harbor would require that separate books and records be maintained for the rental real estate enterprise. Property leased under a triple net lease or used by the taxpayer (including an owner or beneficiary of a relevant passthrough entity) as a residence for any part of the year under Sec. 280A would not be eligible under the proposed safe harbor.

Per @VictoriaD75

[Grimloktt]

Great! So how do I fix this error?

[ReneeM7122]

You can try deleting the form 8995 if you don't qualify for the QBI deduction and that may allow you to e-file your tax return as follows:

1. Find the Tax Tools option on your left menu bar and click on it

2. Click on Tools

3. Find Delete a Form and click on it

4. Look for form 8995 in the list of forms and click on the option to delete it

@Grimloktt

[Grimloktt]

I believe I do qualify for it. So now how do I fix it?

[AmyC]

Follow these steps:

The QBI should be picking up your sch E rentals. You must have marked that you actively participate (in the property profile section) and select the QBI election.

1. Return to the rentals
2. Edit each rental
3. Review property profile
4. Mark that you actively participated,
5. click Done with Rental Property.
6. The program asks Other Situations?, continue
7. Profit or loss, continue
8. Do you want to use a safe harbor? Make the election, continue on

[dascmo]

I deleted form 8995 and I still get this error. Help!

[AmyC]

If you have rental real estate, you want the 8995.

1. Go back to your rental property and edit.
2. Scroll down past property information, income, assets and click done with property. 
3. Continue
4. Do you want to use a safe harbor to qualify this property for a deduction?
   • If you actively participate in the rental (that question was in the property profile section) then you can mark none of these apply or
   • if you spend over 250 hours on the rental and keep separate records, mark the top selection-safe harbor for the property on its own.

The middle option is the real estate enterprise group which you clearly don't have so it should not be marked.

@dascmo

[Grimloktt]

Ok. Figured it out. I'm getting an error because turbo tax selected one property as safe harbor and another as real estate enterprise group. You can check the selections by going to income and expenses -> rental properties and royalties -> select one of your properties -> click edit under qualified business income. Here you can make your selections.

[D247]

I have five residential rental properties and consider them grouped as one 'Real Estate Enterprise.' For QBI Deduction, with my one Real Estate Enterprise, is it 250 hours for the single Enterprise or 250 hours for each rental?

If 250 for all five properties, as I enter each property on Sch E, should I key the actual work hours for that specific property even though one property is 100 and another is 175 (not 250)? I have # hours, description, date, and who performed on each property that, together, total 250+.  I feel like I meet QBI but not sure what numbers to key.

[PatriciaV]

@D247

Each rental real estate enterprise (a rental property or group of similar rental properties, including K-1 rental income) must satisfy these requirements:

1. Each enterprise maintains its own books and records to track income and expenses;
2. At least 250 hours of rental services are performed per year per enterprise; and
3. (Starting with tax year 2019) Contemporaneous records of services performed are kept which includes who performed the service, description of service, the date of the service, and how long it took (who, what, when, and how long).

Rental services can be performed by the owners or by their employees, independent contractors, or agents and would include things like:

• General operation, maintenance, and repair of the property
• Purchasing materials
• Property management activities
• Supervising employees and contractors
• Advertising the property for rent
• Tenant selection and background checks
• Negotiating and executing leases
• Collecting and depositing rent

Activities excluded from the definition of rental services include:

• Time spent traveling to and from the property
• Reviewing financial statements or operational reports
• Financial or investment management (for example, financing)
• Procuring or acquiring property to rent
• Planning, managing, or constructing long-term capital improvements

For more information, see Can I get the QBI deduction on rental income?

[4SSparky]

A  rental real estate enterprise is a Safe Harbor defined by the IRS specifically with respect to QBI income deduction under 199A. For that purpose it is defined as "an interest in real property held to generate rental or lease income. It may consist of an interest in a single property or interests in multiple properties.) Note that Commercial and Residential cannot be combined within the same enterprise. https://www.irs.gov/newsroom/irs-finalizes-safe-harbor-to-allow-rental-real-estate-to-qualify-as-a-b... 
More to your question, if you are choosing to use the Safe Harbor and meet the full qualifications you must assign an enterprise for each property you wish to include. If for example you were combining all your commercial properties into enterprise #1 you would enter a 1 in the RRE# box ( it is basically the same as entering an Aggregation Code.)  In fact if you have entered an Aggregation code and now wish to create a RRE you will need to remove it from the 199A worksheet and enter it on the RRE Statement instead. Gotta love the TCJA.