IS A RESIDENTIAL RENTAL PROPERTY CONSIDERED A QBI

[itonewbie · Accepted solution]

Could be if all the conditions outlined in Notice 2019-07 for safe harbor are met and the signed statement is filed with the return.

[TaxGuyBill]

If it is a Self-Rental:  YES.

If it rises to the level of a Trade or Business:  YES.

Otherwise, NO.

Publication 535:

In general, to be engaged in a trade or business, you must be involved in the activity with continuity and regularity and your primary purpose for engaging in the activity must be for income or profit. If you own an interest in a pass-through entity, the trade or business determination is made at that entity's level.

The ownership and rental of real property may constitute a trade or business. Notice 2019-07 provides a safe harbor under which rental real estate enterprise will be treated as a trade or business for purposes of the QBI deduction. For more information, on the safe harbor see Notice 2019-07. Rental real estate that does not meet the requirements of the safe harbor may still be treated as a trade or business for purposes of the QBI deduction if it is a section 162 trade or business.

https://www.irs.gov/publications/p535#en_US_2017_publink10001326

[itonewbie]

My presumption is that you're raising this question because the rental does not rise to the level of §162 trade or business.  But if it does, it should qualify for QBI and would not have to rely on the safe harbor.