On September 24, 2019, the IRS issued Revenue Procedure 2019-38 finalizing safe harbor allowance of rental real estate for the purpose of Section 199A deduction. If all the safe harbor requirements are met, a rental real estate enterprise will be treated as a trade or business and the related rental income will be eligible for the 20% Section 199A deduction, subject to possible limitations.
The Revenue Procedure clarified that the following requirements must all be met by taxpayers or relevant passthrough entities to qualify for safe harbor –
Rental services that count toward the 250 hour requirement include:
Activities that do not qualify as rental services include:
If you have questions about the safe harbor requirements, call us today.
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