Qualified Business Income Deduction

Is your rental real estate a “business?” Is it eligible for the QBI Deduction? How can you tell? If it is not a business, then what is it?  The Treasury has one set of rules for “business” real estate and another set for “investment” real estate.  Can you qualify for the “safe harbor” election?  Getting ordinary losses on disposals, deducting net operating losses, avoiding the Net Investment Income Tax, claiming Section 179 write-offs, and taking the new QBI Deduction – all depend on your RRE “rising to the level of a business.”   On the other hand, “investment” real estate may avoid the new limits on business interest expense.  Grouping your rental with a related business may help, if the new rules permit it.  Grouping two different rentals may increase the QBI Deduction – but only if you are allowed to.  Know whether your real estate is firmly in the “business” category or may be subject to challenge as an “investment.” And understand which rentals you can aggregate to increase the QBI Deduction.