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The safe harbor excludes if you use as residence. How about if client rents out basement? Then can they use this safe harbor if they meet all other qualifications?
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First, you need to determine whether the basement is appurtenant to the dwelling unit occupied by your client which does not in itself constitute a dwelling unit. Under the regulations of §280A, each apartment and basement within a structure is a separate dwelling unit if it contains basic living accommodation amenities such as sleeping area, toilet, and cooking facilities.
If the basement is considered a dwelling unit on its own, the next question is whether all the conditions for the safe harbor under Notice 2019-07 are met (and consider downstream implications such as rental losses on positive QBI from other qualified ToB).
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