Are my rentals considered qualified business income?

[fkhalilz]

My wife and I own 5 rentals in California and Texas. We fully manage these rentals by ourselves. This includes repairs, maintenance, periodic inspections, travel, finding tenants, paying bills & taxes, etc. We do  not have a registered business entity for our rentals. Our main source of income is from the rentals and we have no other employment.

In 2018 Turbotax Premier there is a question for each rental property whether it is a Qualified Business Income. Even though I have read the help material available in Turbotax, I'm still not sure how to answer this question. We have 100% ownership of these properties.

How should we answer this question and how does our answer affect our taxes?

Thank you!

[Vanessa · Accepted solution]

Yes, if you are managing these rental properties that you own and have a profit, they qualify for the Qualified Business Income Deduction. You do not have to have a registered business entity to claim the deduction. 

It will affect your taxes by giving you a deduction of 20% of your profit to arrive at your Taxable Income. You will see this on line 9 of your 1040. 

[fkhalilz]

I have selected that my rental properties are eligible for QBI deductions in Turbo Tax this year again as per the response I got from you last year (see the reply below this). On one of the pages that follows this election, TurboTax asks for the "Name and Employer Id Number" of the business. I do not have a registered business for any of my 5 rentals. My wife and I own them 100% and we fully manage the day to day activities. This rental activity is our main source of income. If I leave these 2 fields blank in TurboTax, I believe I will not get any deduction for QBI. What do I do?

Thank you!