QBI deduction
The qualified business income (QBI) deduction under IRC section 199A can let owners of pass-through businesses deduct up to 20 percent of qualified income. Rental real estate can qualify when the activity rises to the level of a trade or business, and a safe harbor treats a rental enterprise as qualifying if at least 250 hours of rental services are performed in the year.
The 250-hour safe harbor
- At least 250 hours of rental services per year (management, maintenance, leasing, and similar work) across the enterprise.
- Contemporaneous records of hours, dates, descriptions, and who performed the work.
- Separate books and records for the rental enterprise.
Why records decide it
The deduction often turns on whether the 250-hour log is credible and contemporaneous, which is exactly the kind of record owners scramble to assemble after the fact. AXYS logs qualifying hours from real property activity as it happens and tracks progress toward the 250-hour threshold, so the support exists before the return is filed. This is general information, not tax advice; qualification depends on the owner facts.
Does every rental qualify for the QBI deduction?
No. The rental must rise to a trade or business, or meet the section 199A safe harbor. Passive, hands-off arrangements may not qualify. A tax advisor should confirm.
What counts toward the 250 hours?
Rental services such as tenant management, maintenance and repairs, rent collection, and leasing. An owner personal investment activities, like reviewing statements, generally do not count.
Run the numbers in one system
AXYS unifies rent collection, banking, automated owner distributions, reserves, and accounting. Book a 30-minute walkthrough.