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Level 2
posted Jul 17, 2022 10:00:47 PM

do i qualify QBI for renting a room in my primary residence?

i rent out a room in my own primary residence, certainly i will not qualify with safe harbor as the time required for this activity is too much to meet, however turbo tax latter suggest if this is in US, and is continuous for profit, which i interpreted as this room i rent is in US and i rent it out continuously with fair market price, and since my rental income is higher than expenses can be deducted, so it has profit. then i want to know would this mean i am qualify for QBI? 

 

i also see if not qualify safe harbor, it will get very high audit risk by IRS, so do you think it really worth the risk to use QBI to save 20% taxable rental income? 

0 2 1194
2 Replies
Level 15
Jul 18, 2022 1:19:43 AM

see this thread which discusses rental as a business - would qualify for QBI and as an investment - does not qualify.

https://www.nolo.com/legal-encyclopedia/is-your-rental-activity-business-investment.html#:~:text=Rental%20ownership%20is%20an%20investment%2C%20not%20a%20business%2C,out%20for%20many%20years%20to%20the%20same%20tenant. 

 

"i also see if not qualify safe harbor, it will get very high audit risk by IRS, so do you think it really worth the risk to use QBI to save 20% taxable rental income?" 

I don't think anyone on this forum is going to tell you whether it's worth the risk. that's a personal decision. based on the case in the thread 

about rental property as an investment, my opinion is you don't have a business but others could have a different opinion. 

Level 15
Jul 18, 2022 4:27:06 AM

If you are properly depreciating the rental portion of the home I highly doubt you have positive Sch E amount to get the QBI deduction anyway so this may be a mute subject.