Question

Qualified Business Income Deduction

Forum|Forum|1 year ago
March 6, 2025
2 replies
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I have a rental property with a property management company. According to Turbo Tax, any rental or royalty activity based in the U.S. and carried on with regularity, continuity, and a profit motive, then income is considered Qualified Business Income. Other sources seem to indicate more active involvement is required. I've never taken this deduction in the past. Is this a red flag if I take the deduction?

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ThomasM125

Taking the QBI deduction for a residential rental property could attract the attention of the IRS since it wouldn't apply to all rental activities. Per this Intuit article on the subject, you would have to maintain your own books to track income and expenses, perform at least 250 hours of rental services per year, and keep contemporaneous records of services performed:

This may not apply to you since you use a company to manage the property.

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nelson071Author

Thanks. I've read this, too, but when Turbo Tax prompts me for whether this is QBI, it says that any rental or royalty activity that's based in the U.S. and is carried on in regularity, continuity, and for profit, then the income is QBI. This seems to imply even passive income should qualify.