There are two types of Safe Harbor. The review sounds like it is referring to the first type. Is there any reason why you would not want your property to qualify?
1) The IRS on Tuesday issued a revenue procedure that provides a safe harbor for taxpayers under which a rental real estate enterprise will be treated as a trade or business for purposes of the qualified business income (QBI) deduction of Sec. 199A (Rev. Proc. 2019-38). Taxpayers whose real estate business does not meet the safe harbor may still qualify as a trade or business if it otherwise meets that definition under the Sec. 199A regulations. The revenue procedure finalizes rules that the IRS proposed in January in Notice 2019-07.
2) De Minimis Safe Harbor Election
This election for items $2,500 or less is called the De Minimis Safe Harbor Election. This election is an option you can take each year that lets you write off items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.
If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses, rental properties or farms.
Here are the rules you need to meet to take this election:
- You don't have an applicable financial statement (most people don't).
- You have a consistent process for how you record expenses and assets.
- You record these items as expenses on your books/records.
- The cost of each item as shown on your receipt is $2,500 or less.
