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Rental Property and the Qualified Business Income Deduction

March 3, 2020


The IRS finalized the safe harbor rule that allows rental real estate activities to be treated as a trade or business for purposes of the qualified business income deduction (QBI) in September 2019.

A rental activity can be considered as a trade or business for QBI purposes if it meets all of the following:

  • Separate books and records are maintained
  • The following number of hours devoted to the rental activity must have been performed:
    • In existence less than 4 years – 250 hours each year
    • 4 years or more: 250 hours at least 3 of the past 5 years
  • Must maintain contemporaneous records

If the rental activity qualifies the taxpayer must attach a statement to their return that includes the following:

  • A description of all rental real estate property or properties (including the address and rental category) that qualify for the safe harbor
  • A description of real estate properties acquired or disposed of during the taxable year
  • A statement that the requirements for the safe harbor have been satisfied.

For more information see the following:

Recent Tax Updates

IRS Filing and Payment Deadline FAQs
March 25, 2020

Rental Property and the Qualified Business Income Deduction
March 3, 2020

IRS Identity Theft Resources
February 19, 2020

Kiddie Tax Change and Form 8615
February 12, 2020

IRS Expands Their Identity Protection PIN (IP PIN) Program
January 23, 2020

2019 Federal Return and the Affordable Care Act
January 3, 2020

Additional Updates
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