This analysis is somewhat unclear in the context of a realty rental activity, though the QBI regs point out some factors: Type of property (commercial or residential), extent of day-to-day involvement by the lessor or the lessor’s agent, lease terms, number of properties rented out and other ancillary services provided under the lease. Owners of rental real estate have a safe harbor to mitigate the uncertainty. If met, you can treat the rental as a trade or business for QBI purposes. At least 250 hours must be devoted to the rental activity by the taxpayer, employees or independent contractors in a year. For realty owned four years or more, the 250-hour requirement must be satisfied in three of the five most recent years. Time spent on repairs and maintenance, tenant services, property management, advertising, collecting rents, negotiating leases and supervising workers counts. Hours put in for arranging financing, constructing long-term capital improvements, and driving to and from the real estate aren’t included in the 250-hour standard.

New Rules for Rental Properties Pt 2

by | Oct 24, 2019 | TallyTaxMan | 0 comments