Qualified Business Income Deduction for Rental Real Estate Owners-Safe harbor rule
The 2017 Tax Cuts and Jobs Act (TCJA) created a new deduction known as the Qualified Business Income Deduction (QBID). It is also called the pass-through deduction or Section 199A deduction. The QBID allows small business owners to deduct up to 20% of qualified business income from federal income tax. Rental property owners will interested in the safe harbor rule of the section 199A qualified business income deduction (QBID) for their rental property.
Taxpayers that have income (or loss) from rental property will not be eligible for the QBID when they hold the property for investment purposes.