I believe I spent under 250 hours on my rental last year and was not going to claim the QBI exemption. However, I bought furniture for the rental and wanted to use the de minimis safe harbor to expense it (the items are clearly discrete and each under $2,500). My question is, is there a point where your rental activity is considered passive and not a "business," and therefore ineligible to deduct expenses, like the de minimis safe harbor (DMSH) for expensing items? Or is it not a business for the purposes of QBI but still fitting a lower standard of "business" to deduct expenses like the DMSH?
Note that I co-own this building as tenants in common with someone else. We have not formed a partnership and calculate our income separately, under the IRS guidance that "co-ownership of property maintained and rented or leased is not a partnership unless the co-owners provide services to the tenants." But do I need to be "providing services to the tenants" to be considered a rental "business" that can take more deductions, instead of a passive investing activity?
I just wonder if there is any set of circumstances that threads the needle such that you are a business and can take various expenses and deductions but not "providing services to tenants" (beyond renting property to them) that would lead me and my co-owner to be in an unregistered partnership and delinquent on filing partnership returns.
If it were not a business, would there be any way to depreciate or expense the furniture I bought for the rental? Or would I be SOL?
