Rental Income as §199A Qualified

An easily overlooked part of the requirements for those who have rental income coming in but that is not your primary source of income is that you must provide 250 hours per year of services to the property in order to qualify. That works out to about 5 hours a week. Qualifying for this deduction is a bit like keeping a mileage log. Make sure you log those services including the service provided, who provided it, and the date of the service. This matters even if your rental(s) represent a loss because that loss is carried forward and will offset profits in a later year.

Services can be provided by owners, employees, or outside contractors and include both routine administrative and physical maintenance issues. If you have to visit your tenant to collect the rent check it counts. Just make sure you document it. Overall, travel time to and from the property doesn’t count, nor do activities related to financing, acquiring, or improving the property.

You should also keep separate books and records which implies separate bank accounts as with all business enterprises.

Like everything in taxes, there’s a lot of fine print but most of you do spend a lot of time maintaining your properties and should have no difficulty meeting these requirements. If you have questions, email, text, or call.