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Combine real estate agent business and rental property business for QBI purpose

Hi, I'm a real estate professional (has a license, filing as sole proprietor), helping people purchasing/selling houses.  I also own several rental properties. The rental properties are treated as one enterprise and satisfy QBI safe harbor. 

 

For QBI purpose, can I combine them to one aggregated business? I see aggregating them is better for tax purposes. 

 

However, I'm uncertain how to interpret the following rule:

  1. All trades or businesses meet at least two of these conditions:
    • They provide products, property, or services that are the same or are customarily offered together.
    • They share facilities or significant centralized business elements such as personnel, accounting, legal, manufacturing, purchasing, human resources, or information technology resources.
    • They're operated in coordination with, or reliance upon, one or more of the businesses in the aggregated group.

 

Since to qualify a real estate professional, I may combine the real estate business with the rental business, I would assume that I can combine them. But I'm not sure whether the house purchase/sell and rental businesses are offered together or operated in coordination with each other. I often use my rental experience to advice real estate customers to purchase/sell houses, and I purchase/sell my rental houses myself. Does that count? 

 

If so, how should I answer the following questions?

If you indicate in TurboTax that your business is aggregated with your other businesses, we'll ask you to enter:

  1. A description of the combined businesses and the IRS rules that allow these businesses to be combined for QBI purposes; and
  2. An explanation of what changed from last year, if the businesses that make up the aggregation are different from last year.

 

Can someone enlighten me on the IRS rules that allow the real estate and rental businesses to be combined? Also, I didn't combine them last year since I didn't try to combine them in turbotax last year. 

 

Thanks a lot!

 

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2 Replies

Combine real estate agent business and rental property business for QBI purpose

Combine real estate agent business and rental property business for QBI purpose

see this link for a discussion of aggregation because there are specific rules for aggregation. you are not an SSTB

https://www.thetaxadviser.com/issues/2019/may/sec-199a-aggregation-trades-businesses.html#:~:text=Fo... 

 

if it is not clear then you should consult a tax pro who could better advise you. 

 

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