Husband & wife own a commercial building that is leased to an S-Corp wholly-owned by wife. Under Notice 2019-38, is this considered self-rental and therefore NOT allowed as a QBI deduction to husband & wife on their MFJ return?
Q17. If someone is a real estate professional, will their rental real estate qualify for the deduction?
A17. The deduction is not based on whether the taxpayer qualifies as a real estate professional under section 469. Rental real estate may constitute a trade or business for purposes of the QBI deduction if the rental real estate:
Rises to the level of a trade or business under section 162,
Satisfies the requirements for the safe harbor provided by Rev. Proc. 2019-38, or
Meets the self-rental exception (i.e., the rental or licensing of property to a commonly controlled trade or business conducted by an individual or RPE).
