At a recent Spidell update seminar, the 199A instructor said that a single family rental owned by an individual and managed by a real estate manager was not a trade or business.
Gary McBride in his tax update class says all rental real estate is a trade or business (except in the case of NNN net lease rentals). He cites a number of tax court cases where the tax court has held real estate gross rentals to rise to the level of a trade or business, even when the taxpayer had only one rental property.
What the speaker meant to say was that some people don’t know if having a manager makes them not qualified. The truth is that nobody knows for sure whether rental real estate qualifies. Does one property make it a trade or business or 100 rentals. All we can do is wait for further guidance.