Yes, unless it's triple net.
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What are the rules on operating my OZ investment?
What qualifies as management if one redevelops a property and leases to a tenant? Will that qualify as managing a project?
Answers
What we know is that triple-net leases are not "managed," insofar as they are not considered a Section 162 trade or business. That's the standard for leases, and it's not incredibly clear in the case law or IRS guidance. Generally, the landlord needs to be performing real services, such as routine property maintenance, payment of expenses, and negotiation of new leases (for properties with multiple tenants).
As long as the lease does not hit the triple net lease threshold provided in the regulations, it may qualify as active trade or business.
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