New 20% Deduction For Landlords

Claim On Your 2018 Taxes

Many business owners will benefit from the new 20% Qualified Business Income (QBI) deduction created by the 2017 Tax Cuts and Jobs Act (TCJA). However, until last week, it was unclear if landlords who earned a profit from rental real estate were considered business owners and therefore able to claim this deduction.

The Treasury Department and IRS released Notice 2019-07 which explains the “safe harbor” test to determine your eligibility. Using the chart below, if your answers to the questions match the ones shown, you qualify!

You must attach a statement to your tax return claiming your section 199A deduction and confirming you have satisfied all requirements.


*Rental Services can be performed by you or
independent contractors, agents, or employees

Rental services for this deduction include:

  1. Advertising to rent or lease the real estate
  2. Negotiating and executing leases
  3. Verifying information contained in prospective tenant applications
  4. Collecting rent
  5. Daily operation, maintenance, and repair of the property
  6. Management of the real estate
  7. Purchasing materials
  8. Supervision of independent contractors, agents, or employees

Rental services for this deduction do not include:

  1. Financial or investment management activities
  2. Time spend to obtain the property
  3. Planning, managing, or constructing long-term capital improvements
  4. Time spent traveling to and from the property

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