TIC Syndication: Does it apply for a QBI Deduction?

2 Replies

I have an accountant asking if our syndication is eligible for a QBI tax deduction. Under the rules around QBI, it says that a REIT and qualified PTP income is eligible for the QBI deduction.


For reference, here is a link to the Org Chart: https://drive.google.com/open?...


There are two ways investors can invest in the syndication:

Cash:

Cash investors will invest into Roseleaf LLC, the holding LLC for the portfolio. The holding LLC has a TIC interest in each of the three properties. The income to investors in Roseleaf LLC is circulated through rent paid from the three properties to Roseleaf LLC.

1031 Exchange:

Investors such as Michael D. invest into the TIC so that they can be directly on title. They are in the TIC with Roseleaf LLC, the manager of the facilities.

@Anthony Barbato

An accountant is asking you whether the business is eligible for QBI?? That’s interesting...

REITs are eligible as you stated. Syndications are generally partnerships so need to qualify under any 1 of 3 tests. Qualify as 162 trade or business. Safe harbor exception. Or rented out to related entity. I would say consult with a CPA for specifics on these tests.

If a TIC qualifies for the QBID, it implicitly has risen beyond a mere investment to the level of a trade or business and thus a 1065 should be filed.

Agree with Lance that you'll want to consult a tax professional.  Sounds like your accountant is more of a generalist/bookkeeper.