vsearch1
New Member

Safe harbor and new LLC

I started my LLC last year for my rental property. I had more expenses than a profit for the year, I am confused about the safe harbor. Does it not matter because I had more than double the expenses than the rental income? Please help!

MinhT
Expert Alumni

Business & farm

it is quite frequent to have rental losses in the first few years of rental due to repairs, depreciation, property taxes and mortgage interest.

There are two safe harbor elections that you can make: the de minimis safe harbor election and the safe harbor election for small taxpayers.

Please read this IRS document for more information:

https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

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