Does income received from renting out a room in a personal residence qualify for a QBI deduction?

[itonewbie · Accepted solution]

According to Federal Tax Day, a number of speakers, including those from AICPA and Council for Electronic Revenue Communication Advancement (CERCA), at the Oct 16 public hearing for the proposed regulations have asked the IRS to provide clear guidelines on when Sch E activities would rise to the level of a §162 trade or business.  The rationale is that this should avoid taxpayers applying different interpretations and simplify tax administration.

It is also reported that the "regulations are expected to be finalized before the 2019 tax filing season."

In other words, the short answer is dunno yet but watch out for further development.

[abctax55]

A recent thread on whether rentals "qualify" for 199A 

https://accountants-community.intuit.com/questions/1778761-does-a-schedule-e-rental-property-qualify...

In your case, my concern would be whether the rental rises to the level of a trad or business, given the related party interaction.

[abctax55]

As in an AirBnB scenario?  Is it reported on Sch C or Sch E?

C = I'd say yes

E = I'd say we don't know yet.  The IRS guidance issued so far is about as clear as the air in most of Northern CA right now.

[meinfeldt]

this is a Schedule E situation...I just downloaded the initial ProSeries '18 program...Sch C income is counted as QBI....but I don't see where Sch E items are flowing to the QBI worksheet

[Marc-TaxMan]

Gotta wait for the updates.  Not yet happening for E, or K-1, or ?????

[abctax55]

related?

https://accountants-community.intuit.com/questions/1750423-what-expenses-can-be-deducted-for-a-perso...

[meinfeldt]

Yes, these questions are related and pertain to my personal situation...

[sjrcpa]

I would not think that this situation is a trade or business. No QBI deduction IMHO.

[abctax55]

I agree - I think it would be tough to meet the "trade or business" requirement.

[itonewbie]

That would be my view as well.

[meinfeldt]

Thanks to all for the feedback...I'll try to be patient...I am trying to do my personal tax planning and learn the new program changes before the holidays!

[abctax55]

YVW....what you are dealing with personally isn't pleasant. Then you throw in uncertain tax considerations.