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QBI Rental Real Estate Safe Harbor Rule Notice 19-07

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For 2018 Joint Return Form 1040: TP owns 2 rental real estate property (2 schedules E). Property A was their principal residence until June 30, 2018 and was rented out for the rest of 2018. Property B was a rental property for many years. TP also had an interior design business on Schedule C. TP’s threshold is below $315,000.


Question #1: residential real estate property A: is excluded from rental real estate safe harbour rule under IRS Notice 2019-07 as it was used as a personal residence at any time during the year (2018). Therefore, no QBI deduction is available for property A. Is this correct?


Question #2: residential real estate property B: under the IRS Notice 2019-07, can TP satisfy the 250 hours or more rule based on the total hours spent on both property A and property B? or 250 hours spent on property B alone?


Question #3: Any sample statement of rental real estate safe harbor rule as required by Notice 2019-07?


Question #4: should TP rely on Notice 2019-07 or Rev Proc 2019-38?


Question #5: Interior design is not an SSTB and therefore TP can claim QBI (also TP is below the $315,000 threshold).


Thank you in advance for your time and attention.

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Level 15

#1 I will leave that for you to do further research. I think on 7/1/18 it became a rental and that after that time there was no personal usage is a possible view.

#2 See #1

#3 Go to the Rental and Click 5 more to get Qual. Bus. Inc. Deduction > 2nd item enter a 2 (for property 2) > check return > Forms > US > QBI Rental Real Estate Safe Harbor = your "sample" that will go with the return, if you deem it appropriate.

 


ex-AllStar

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Level 15

#1 I will leave that for you to do further research. I think on 7/1/18 it became a rental and that after that time there was no personal usage is a possible view.

#2 See #1

#3 Go to the Rental and Click 5 more to get Qual. Bus. Inc. Deduction > 2nd item enter a 2 (for property 2) > check return > Forms > US > QBI Rental Real Estate Safe Harbor = your "sample" that will go with the return, if you deem it appropriate.

 


ex-AllStar

View solution in original post

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Many thanks for all your time and comments!

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@George4Tacks The program sample statement only has space for one signature but this is a joint return.  Is it ok if only one of the spouses sign? Thanks.

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Level 15
No signatures needed.

ex-AllStar
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Level 15

A rental activity can be a Qualified Business without invoking the safe harbor.


ex-AllStar
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Level 15

True.  Regular, continuous, and substantial activities with a profit motive is what we'd be looking for in a §162 ToB then, except there is not a lot of certainty in that for a lot of landlords.

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Still an AllStar