Rental Real Estate - OBI Eligible?

[GodFather]

I've researched the ability for rental real estate to qualify for QBI.  From what I've seen, the casual land lord is not necessarily eligible to claim the QBI deduction.  Is that understanding correct?  There are requirements such as separate books, time spent on rental services, documenting the hours and services spent.  Can anyone chime in on how they handle the landlord who has two or three properties they rent.  Assuming they keep adequate records.  

[jeffmcpa2010 · Accepted solution]

If they have a paid "Property Manager" probably not qualified.

If they do everything but it doesn't take much time, and they treat their activity as a "trade or business" (Like records you would keep for a business, rather than more casual like a lot of small landlords get) I generally will count as QBI eligible. You don't have to meet the Safe Harbor to qualify, but I do counsel them to do everything right. IE Bank account for the rental business treated like a business (not mixing personal and business in one account), Preparing 1099-NEC or 1099-Misc when you would in a business.(IE Furnace or Plumbing Repairs) etc.

I have some clients that I know don't keep good enough records that I can dig through and find the 1099 information to prepare them, and don't keep separate accounts, the I do treat as non-qualified as well.

It's one of those judgement calls that we have to make.

That's my opinion, I am sure that there are others who may disagree.

[GodFather]

Thanks very much.  Your response was exactly what I was looking for.  I've also had the casual landlord who does keep records and is actively involved in the maintenance and upkeep of the properties.  I would generally allow QBI in those instances versus those who I know are not involved.  

Appreciate your response.