So, does everyone who manages rentals get to claim the 20% pass-through deduction this year? Is there anything special I need to do to make sure I qualify?
I understand that it's not really 20%, in the case of a rental business with no employees, but the lessor of 20% of QBI or 2.5% of the unadjusted cost basis excluding the land. So if I bought a property for 300k, and 200k of that was the structure, then regardless of how much I've depreciated since then as long as I'm still depreciating it I get to claim 2.5% of 200k as a deduction each year. That's $5k/year, and that's on top of the normal RE deductions for insurance, maintenance, and depreciation.
My rentals aren't terribly profitable anyway, in this market, so I expect that's going to get me to zero. Does the pass through deduction carry through to show a loss on your schedule E that can then be used to offset other income on your 1040, or is it capped at zero? If it's capped, that would seem to suggest that a property would need to generate at least 2.5% of the cost basis more than break-even after depreciation in order to receive the benefit of this new tax break. I'm pretty sure mine don't.