Tenant in Common, Rental Property, QBI Section 199A

[BobKamman]

We had a question recently that of course the Intuit “Search” function could not find if the CEO’s life depended on it. It involved a rental property owned as “Tenants in Common” which apparently was filing a partnership return. This was perfectly appropriate although it wasn’t clear until about the third or fourth reply.  The interest and taxes were already reflected on the Schedule K-1.

It just occurred to me today that to qualify for the Section 199A QBI deduction, a rental property with multiple owners must file as a partnership. So that’s probably being done more often than before the law familiarly known as TCJA.

[sjrcpa]

"to qualify for the Section 199A QBI deduction, a rental property with multiple owners must file as a partnership"

Where'd that come from?

AFAIK a rental needs to be a trade or business to qualify for the QBI deduction.

[BobKamman]

And the safe-harbor rules say, in effect, that "if you're really a trade or business, you'll be filing as a separate entity."

[TaxGuyBill]

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@sjrcpa wrote:

"to qualify for the Section 199A QBI deduction, a rental property with multiple owners must file as a partnership"

Where'd that come from?

AFAIK a rental needs to be a trade or business to qualify for the QBI deduction.

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If it is a Trade or Business, it would be on the 1065 (unless the owners were only husband-and-wife).   Mere co-ownership of a rental doesn't need to be on a 1065 because it is not a "trade or business".

https://www.irs.gov/instructions/i1065#en_US_2021_publink11392vd0e339

[sjrcpa]

Who uses the safe harbor? I don't.

[sjrcpa]

So you think these syndicated TICS, with professional property management, hundreds of owners  and who knows how many commercial and residential properties, are not a trade or business and no QBI deduction? They don't file a 1065.