Qualifying for QBI deduction on rental property with extensive repairs - no receipts

Just wrapping up my second year as a rental property owner and manager, and I've hit a bit of a snag with my QBI documentation. Started the year with some minor repair issues, but then disaster struck in October when my tenants moved out owing a month's rent and left the place in absolute shambles. It took me almost 2 months, roughly $12,000, and countless hours of my own labor to get the property back into rentable condition. Problem is, I didn't keep proper receipts for a lot of the work - just have my credit card statements as proof of purchases. I'm pretty confident I've put in well over 250 hours of work on the property this year between routine management and this massive restoration project. Would a detailed spreadsheet tracking all the repairs, costs, and labor hours be sufficient documentation to qualify for the QBI deduction if I get audited? I've broken down everything from painting walls to replacing damaged fixtures to deep cleaning, but I'm worried that without physical receipts, I might be out of luck. Anyone dealt with this situation before?

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20 comments

Jacob Smithson

•8M

Yes, a detailed spreadsheet can work for tracking your 250+ hours for QBI purposes, but you need to be meticulous about it. The IRS wants to see contemporaneous records - meaning you should be logging activities as you do them, not creating a spreadsheet months later from memory. For your expenses without receipts, credit card statements actually provide a good paper trail. Match them with your spreadsheet entries detailing what each purchase was for. Take photos of the property showing the repairs/improvements as additional documentation. If you used any contractors, get statements from them even retroactively. For your own labor hours, keep detailed notes of what you did each day - "3 hours replacing bathroom fixtures," "4 hours painting living room," etc. Include dates and be realistic with time estimates. If audited, you want to show you weren't just making up numbers.

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Jacob Smithson

•8M

Bank statements work similarly to credit card statements - they establish that you made the purchases, which is a good start. Just make sure you have notes on what each transaction was for specifically. For your own labor, you don't need to assign an hourly rate for QBI qualification purposes. The 250-hour test is about time spent, not the value of that time. You're just tracking hours to demonstrate "material participation" in the real estate business. The expenses you can deduct are the actual costs of materials and any paid labor, not the value of your own time.

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Maya Patel

•8M

After dealing with similar rental nightmares without proper documentation, I found this amazing tool called taxr.ai (https://taxr.ai) that saved me when trying to organize my rental property expenses retroactively. I uploaded my bank statements and credit card bills, and their AI extracted all my potential tax deductions and categorized them properly - even suggesting which ones qualified toward my QBI hours. The system actually helped me build that detailed spreadsheet you're talking about by matching up my financial records with the types of activities that count toward the 250-hour test. It even flagged potential audit triggers in my documentation and suggested additional supporting evidence I should gather. Really helpful for rental property owners who aren't naturally organized with receipts (like me)!

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Maya Patel

•8M

It doesn't just organize expenses - it actually helps you document activities that qualify toward the 250-hour test. You can input descriptions of work performed, and it suggests how to properly categorize and document them according to IRS guidelines for real estate professionals. The AI doesn't guess what work you did - you're right that would be impossible. Instead, it helps you match your financial records with your activities to create proper documentation. For example, when it sees a purchase at a hardware store, it prompts you to document what repair that was for and how many hours you spent on it. Then it creates an IRS-friendly log with all the proper categorizations. Basically turns your messy records into an organized system that can withstand scrutiny.

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Emma Garcia

•8M

I was initially really skeptical about using taxr.ai when someone recommended it for my rental property documentation issues, but it actually worked amazingly well. I had a similar situation with spotty documentation for a rental rehab project, and I was worried about qualifying for QBI. The system helped me reconstruct my activity log by analyzing my spending patterns and allowing me to document what each purchase was used for. It even flagged when I was counting activities that wouldn't qualify toward the 250-hour test and suggested additional documentation I should gather to strengthen my case. The detailed spreadsheet it helped me create includes dates, specific activities, time spent, and connects each entry to financial records when applicable. My accountant was impressed with how thorough it was and said it would absolutely stand up to scrutiny if I got audited. Definitely worth checking out if you're trying to properly document for QBI qualification.

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Ava Kim

•8M

If you're having trouble getting IRS clarification on whether your documentation is sufficient for QBI, try Claimyr (https://claimyr.com). After waiting on hold with the IRS for HOURS trying to get answers about rental property QBI documentation, I gave up and tried this service. They got me connected to an actual IRS agent in about 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with gave me specific guidance on exactly what documentation would be acceptable for proving the 250-hour test for QBI without receipts. They confirmed that contemporaneous logs are ideal but reconstructed records with supporting evidence (bank statements, photos, communications with contractors/tenants) can work if created in good faith. The advice was way more specific than anything I found online.

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Ava Kim

•8M

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Ava Kim

•8M

It doesn't just call them - they have some system that navigates the IRS phone tree and waits on hold for you. When they actually reach a human agent, they call you and connect you directly. So you don't waste hours of your day listening to hold music. Yes, technically you could call yourself, but have you tried recently? Last time I called about a rental property tax question, I was on hold for over 2 hours before getting disconnected. The IRS is severely understaffed, and their phone system is overwhelmed. This service just handles the frustrating waiting part so you don't have to.

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Emma Garcia

•8M

Alright, I need to apologize for my skepticism earlier. After waiting on hold with the IRS for nearly 3 hours yesterday and getting disconnected AGAIN when trying to ask about QBI documentation requirements, I broke down and tried Claimyr. I was connected to an actual IRS representative in about 20 minutes. The agent confirmed that for rental QBI purposes, a reconstructed activity log combined with bank/credit card statements IS acceptable documentation, especially if you include photos of the work and any communications with contractors or tenants that corroborate your timeline. The agent even emailed me some specific guidelines about what they look for during an audit of rental property QBI claims. Saved me days of research and worry. Sometimes it's worth admitting when you're wrong, and I was definitely wrong about this service.

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Jacob Smithson

•8M

There's some confusion here. There are actually two separate tests: one for being a "real estate professional" (which affects whether rental losses can offset other income) and one for the "safe harbor" for rental income to qualify for QBI. For QBI purposes, the IRS created a safe harbor where if you can document 250+ hours of "rental services" per year on a property (or group of properties), that rental activity can qualify as a "trade or business" eligible for QBI. This is true even if you don't meet the stricter real estate professional test. The 250 hours can include management, maintenance, repairs, collecting rent, etc. So yes, you can potentially claim QBI on rental income even with another job, as long as you meet the 250 hour requirement for your rental activities specifically.

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Lucas Notre-Dame

•8M

I created a simple document with before/after photos side by side, each labeled with the date and a brief description of the work performed. Under each photo set, I noted how many hours I spent on that specific repair and any materials purchased. They also asked for my activity log (which matched the photo document), bank statements showing material purchases, and communications with tenants about the repairs/issues. Having text messages where tenants reported problems and my responses about fixing them was surprisingly helpful as supporting evidence. The auditor seemed most impressed with the thoroughness and consistency across all the documentation rather than any single piece.

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