Tax-Smart Investing 2024: Qualify for 20% QBI Deduction with Private Mortgage REITs

Maximizing Tax Benefits: How a Private Mortgage REIT Can Qualify Investors for the 20% Qualified Business Income Tax Deduction in 2024

As we step into the year 2024, investors are faced with an ever-evolving landscape of tax regulations and investment opportunities. One crucial consideration for investors this year is the 20% Qualified Business Income (QBI) Tax Deduction, which can significantly reduce the tax burden on eligible income. In this article, we will explore how investing in a Private Mortgage Real Estate Investment Trust (REIT) can qualify investors for this valuable tax deduction and why it’s essential to consider the tax consequences of their fixed income investments. 

Understanding the 20% Qualified Business Income Tax Deduction: 

The Qualified Business Income Tax Deduction, often referred to as the QBI deduction, was introduced as part of the Tax Cuts and Jobs Act (TCJA) in 2017. This deduction allows eligible taxpayers to deduct up to 20% of their qualified business income from certain pass-through entities, including real estate investments. This means that a portion of the income generated from investments in Private Mortgage REITs can be eligible for a significant tax benefit. 

How Private Mortgage REITs Qualify Investors for the QBI Deduction:

1. Pass-Through Entity Structure: Private Mortgage REITs typically operate as pass-through entities. This means that the income generated by the REIT is passed through to the investors, who report it on their individual tax returns. As a result, the income from the REIT can potentially qualify for the QBI deduction. 

2. Active Business Requirement: To be eligible for the QBI deduction, the income must be derived from a qualified trade or business. Private Mortgage REITs often engage in active lending and investment activities related to real estate financing, which can meet this requirement. 

3. Income Limitations: It’s important to note that the QBI deduction has income limitations and may phase out for high-income taxpayers. However, if the income is generated through a REIT, the income limitations may not apply to those in higher tax brackets. Investors should consult with tax professionals to determine their eligibility based on their specific financial situation. 

Considering the Tax Consequences of Fixed Income Investments: 

 Investors should be mindful of the tax consequences of their fixed income investments, especially in a year like 2024 when tax regulations may have evolved. Here are some key considerations: 

1. Diversification: Diversifying your investment portfolio is a key strategy to mitigate risk. While the QBI deduction can provide tax benefits for Private Mortgage REIT investments, it’s crucial not to put all your eggs in one basket. Consider a mix of fixed income investments to spread risk. 

2. Consult with Tax Professionals: Tax laws can change, and individual circumstances vary. It’s essential to consult with tax professionals who can provide personalized advice based on your financial goals and the latest tax regulations. 

3. Stay Informed: Stay informed about changes in tax laws and regulations that may impact your investments. Tax planning should be an ongoing process to optimize your financial strategy. 


Investing in a Private Mortgage REIT in 2024 can potentially qualify investors for the 20% Qualified Business Income Tax Deduction, offering valuable tax benefits. However, it’s essential to consider the tax consequences of fixed income investments as part of your overall financial strategy. Diversification, professional guidance, and staying informed about tax regulations are key steps to make the most of your investments in the ever-changing tax landscape. 


About the Author 

Brock VandenBerg is the President of TaliMar Financial and Fund Manager of TaliMar Income Fund I. Mr. VandenBerg started investing in individual trust deeds in 2008, providing capital to real estate investors taking advantage on the housing crisis. He soon brought in outside investors to share in this lucrative opportunity to earn above market returns. After funding over $375 million in short-term loans and attracting over 500 investors, Mr. VandenBerg launched TaliMar Income Fund I in 2021 to offer investors a much more efficient way to invest in individual trust deeds. Currently, TaliMar Income Fund I invests on behalf of over 220 individual investors with over $60 million in assets under management.  



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