If you are a real estate investor, owning many units or just one, there is an important tax law change that affects you. Beginning in 2018, in order to qualify for the Qualified Business Income (QBI) Deduction, you must follow these four steps:
- You must keep separate books for your rental activity
- You must spend at least 250 hours of rental services
- Beginning in 2020, you must keep a record of the time that you spend in the rental activities
- Attach a statement to your tax return stating that you have met these qualifications.
Only certain activities can be included in the 250 hours and reviewing financial records, property improvements and traveling to and from the property do not qualify.
If you are a real estate investor, contact us to learn more about this tax law change and how it affects you.