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Should this business be treated as part of a combined business

I have 3 rental properties and after entering expenses, there is a question "Should this business be treated as part of a combined business" and gives me a choice of #1) my name or #2)this business is independent of any other activities.  Which option should I choose to get maximum QBI deduction?

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1 Reply
PatriciaV
Expert Alumni

Should this business be treated as part of a combined business

Combining your rental properties into an enterprise is a way to show the IRS that these properties are a business and not investments. You should be aware of the conditions for an enterprise to qualify for QBI.

 

To take the QBI safe harbor, you must have:

 

For a single property
 1. Performed rental services for at least 250 hours (you or someone you hired)
 2. Kept separate books and records showing income and expenses
 3. Didn't use it as your residence
 4. Didn't lease the property under a triple net lease
 5. Didn't rent the property to a commonly controlled business

 

For an enterprise
 1. Met criteria 1-5 above, but for the whole enterprise, AND either of the following,
 2. Combined into the enterprise either all residential or all commercial properties,
 OR
 3. Combined all properties in a single, mixed-use building of residential and commercial properties

 

Note the blue "Learn More" links on the entry screens within the TurboTax program. Most topics provide additional information using these links.
 

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