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LearnFAQSelf-Employed & Small Business

Is my rental income eligible for the QBI deduction?

Answer

Sometimes. Rental real estate can qualify for the QBI deduction if the activity rises to the level of a trade or business, which is a facts-and-circumstances test. The IRS created a safe harbor: if you (or your agents) perform at least 250 hours of rental services per year, keep separate books, and maintain contemporaneous records, the rental generally qualifies. Casual, hands-off rentals may not meet the bar. Triple-net leases and property you use personally are often excluded. Because qualification hinges on documentation and activity level, keep detailed logs of hours and tasks. The rules are technical and have specific recordkeeping requirements, so review the current safe harbor at irs.gov or with a tax advisor before claiming it.

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