I'm driving myself a little crazy with this. I know that a taxpayer doesn't need to meet the safe harbor tests in order for their rental(s) to be QBI eligible. However, going based on regular and continuous involvement with a profit motive implies that almost any rental would get QBI.
My clients have a rental in another state. There are no separate books but it has its own bank account. Their goal is for this property to be minimally to moderately profitable. It had a large first year loss. Going forward it may have a small loss or a small profit after depreciation. I'm hesitant to treat this rental as a business though because both of them are business owners and allowable rental losses could dilute QBI deductions for their businesses.
Another client has a single short term rental (< 7 days) which has its own books. However, he also has a Schedule C business. The nonpassive losses from the rental would negatively impact his QBI deduction.
I understand that we can't cherry pick and it's important to be consistent for better or worse. I just see a lot of conflicting info from other pros. Some will say just one rental without books wouldn't qualify while others would disagree. I don't want to jump into calling these QBI when it could have a negative impact overall.
Really torn on QBI for rental properties
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Posted by ViewSingle4522