QBI - Can I switch between years how I aggregate my properties?

[Justin Brin]

In the past few years I didn't aggregate my properties for QBI but this year I decided to do so. Especially that I worked more than 250 hours on my properties this year. Is that OK to change between no aggregate to aggregate ?

I also choose QBI safe harbor to reduce audit risk.

[Ashish Acharya]

@Justin Brin Yes, you can elect to aggregate your rental properties for Qualified Business Income (QBI) purposes, but once you do, you must continue to aggregate those same properties in future years unless there is a significant change in circumstances (such as disposing of a property). The IRS generally does not allow switching back and forth between aggregated and non-aggregated status year to year.

By electing QBI safe harbor, you ensure that your rental activities qualify as a trade or business under §199A, provided you meet the 250-hour material participation rule and maintain proper records. However, safe harbor is not required to claim QBI; you can still qualify under general trade or business principles.

If you haven't aggregated properties in prior years, you must attach a statement to your tax return in the first year of aggregation, identifying the properties and explaining why they meet IRS guidelines.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.