Am trying to determine whether or not to elect to use the safe harbor for rental property or not.
(IRS notice 2019-07). It is a commercial property (office condominium). We satisfy all the criteria (separate books and records, 250 of rental services documented with timesheets, etc., is not a residence, is not a triple net lease, was not rented to a commonly controlled business).
In TurboTax Home and Business this rental property comes out on Schedule E. If I elect the small business safe harbor, the QBI deduction IS applied, and if I check the box "None of these apply", the property still qualifies for the QBI deduction.
So -- am trying to understand the "why" to elect small business safe harbor -- when the QBI deduction is applicable for both scenarios?
The De Minimus Safe Harbor is designed to allow the owner to expense certain assets instead of deprecating them.
This election for items $2,500 or less is called the De Minimis Safe Harbor Election. This election is an option you can take each year that lets you write off items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.
If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses, rental properties or farms.
Here are the rules you need to meet to take this election: