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Level 3
January 11, 2019

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

  • January 11, 2019
  • 4 replies
  • 29 views
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    4 replies

    itonewbie
    Level 15
    January 11, 2019

    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.

    ---------------------------------------------------------------------------------Still an AllStar
    abctax55
    Level 15
    January 11, 2019

    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.

    HumanKind... Be Both
    abctax55
    Level 15
    January 11, 2019

    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.

    HumanKind... Be Both
    meinfeldtAuthor
    Level 3
    January 11, 2019
    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
    abctax55
    Level 15
    January 11, 2019
    meinfeldtAuthor
    Level 3
    January 11, 2019
    Yes, these questions are related and pertain to my personal situation...