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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

Reminder: Filing Deadline is July 15
July 7, 2020

Reminders of Filing Deadlines for 2019 Returns and 2020 2nd Estimated Payment
June 8, 2020

SECURE Act Retirement Account Changes
June 2, 2020

CARES Act Tax Provisions
May 7, 2020

Additional Things to Know About the Economic Impact (Stimulus) Payment
April 22, 2020

IRS Launches “Get My Payment” Online Tool
April 16, 2020

Additional Updates
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