Fast Depreciation Flashcards
When do you use 179
When it is Non-residential (no apartments), when it is an interior improvement and the cost of de minimus is too high. Roof on a strip mall. HVAC on a hotel. No Land Improvements. Qualified Real Property - Strip Mall
When Do you use Bonus
When costs more than de minimus
When it is a land improvement immediately
Residential rental - Duplex
Cant use if life of item is greater than 20 years
When do you use De Minimus
Residential real property - 2,500 or less, or itemized and each is that amount. 100 windows at $700 each - good to go.
What is qualified real property or qualified improvement property
improvements to nonresidential real property - roofs heating ventilation, and air conditioning, fire protection, and alarm systems
QBID and residential rental real estate
To qualify it must be a business. Need to have regular and continuous business - most qualify under this. pretty low bar.
Trouble when it was a former personal residence and only rent out a small part. or you attempted to rent, but didn’t actually rent it
Trouble when it is a single piece of land and landlord is inactive - then Not a business
Triple Net Leases
Conflicting infor about whether this is an business. If the landlord only collects a check - then it is iffy - but if they are active y - they call the plumber - then you are a business and can take QBID for that
Substantial authority
You have substantial authority if the weight of rulings and cases etc is substantial to your side versus the opposing side
Safe Harbor to have QBID Eligible income
- Real Property Directly Owned or through SMLLC
- You can group the property types together - residential houses and office building
- This makes it easier to meet the 250 hour requirement
- Need to have separate books and records for each
What is the 250 hour test
- if owned less than 4 years then must have 250 hours in current years
- if owned more than 4 years then more than 250 hours in the last 3 or 5 years.
- owners, employee and independent contractors time counts - property managers, plumber etc,
What is excluded from Safe Harbor
- If you use the property as a residence ( greater than 14 days)
- If you have a triple net lease
- if it is a self rental
- If you rent to a SSTB - you can still qualify for QBID but cant use the safe harbor
What is the 250 hour rule
This is the rule that your rental activity is a business. You must perform 250hours of rental real estate services per year and keep records to qualify for the pass through deduction - 199A QBID
