Home rental income: QBI or non-QBI?

[chapinreyes]

I have renters renting my home. The home was rented to tenants all of 2019.  

====> what does one need to look at to decide if the income from the home rental is considered QBI ?

[VictoriaD75 · Accepted solution]

The tax law provides a safe-harbor under which income from rental real estate (even if treated as passive) can qualify as qualified business income (QBI). The requirements are:

1. 250 hours or more are spent by the taxpayer with respect to the rental activity
2. Contemporaneous records of the time are maintained
3. Separate books and records for the rental activity are maintained

Time spent related to the rental activity on advertising, negotiating with tenants, verifying applications, daily operation, repair and maintenance, purchase of materials, and supervision of employees all count toward the required 250 hours. Time spent purchasing or financing the acquisition of the property and time spent traveling to and from the property do not generally qualify.

QBI on Rental Income

[chapinreyes]

What if you have a property management company managing the home/tenants?  

[VictoriaD75]

That is not considered your time spent. You can deduct the cost of the property management company, but their work does not count as hours for the safe harbor election. All of the above conditions must apply to qualify a rental for the QBI deduction.

[Critter-3]

Since rentals seldom  have a profit the QBI  deduction is irrelevant.