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Re: Need clarifications: Section 162 for rental properties to get QBI deduction

But.... TT says the QBI Safe Harbor conditions include 250 hours or more in rental services "by you or hired workers."  

 

We have a vacation rental house. We have a weekly landscaping / plowing service, plus cleaners who come to clean between guests.  We have a wash and fold service for linens. Even without what we do for calls, emails, contracts, tax filing, travel, interviewing contractors, etc. just the regular cleaning and maintenance is well over 250 hours. 

 

Isn't that what this means?

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2 Replies
PatriciaV
Employee Tax Expert

Re: Need clarifications: Section 162 for rental properties to get QBI deduction

Yes, you have described the type of services that qualify for the 250 minimum hours.

 

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.

See this TurboTax article for more information: Can I get the QBI deduction on rental income?

 

@Debzz 

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Re: Need clarifications: Section 162 for rental properties to get QBI deduction

the IRS safe harbor as set for in REV PROC 2019-38

https://www.irs.gov/newsroom/irs-finalizes-safe-harbor-to-allow-rental-real-estate-to-qualify-as-a-b...  

 

note :Qualifying rental services include advertising, negotiating lease agreements, due diligence of tenant applications, rent collection, maintenance and repairs, and supervision of employees and independent contractors. Investment and financial analysis activities do not qualify as “rental services” for purposes of the safe harbor, nor do hours traveling to and from the rental properties.

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