Safe harbor, group or ungroup rental properties as 1 enterprise in TT if intend to sell some properties later?

[999dwdw]

I have 7 residential properties.  I grouped each individual rental as 1 enterprise in prior years because planning to sell some of them later. I did not spend 250 hours per property but over 750 hours on all 7 properties. I claim Real Estate Professional.  Questions...

--Can I group 7 properties back in 1 enterprise so to fulfill the total 250 hours requirement? How to do that in TT?

--I am planning to sell 2 properties this year and sell 2 next year,  as I read through the posts, someone did mention it was a reporting nightmare and advised against grouping properties together.  So, should I group them this year to make it right ?

--After selling all 4 properties in next 2 years, then I may spend less than 250 hours, no longer qualify for safe harbor, can I 'unenroll' from safe harbor? How? Please advise

[Mike9241]

to be a REP you must meet two rules

1) more than 50% of your personal services during the year are performed  in real estate trades or businesses in which you materially participate,

2) you spend more than 750 hours of service during the year in real property trades or businesses in which they materially participate. Depending on the facts and circumstances, a real property trade or business for this test may consist of one or more real property trades or businesses.

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as a REP losses are not passive.

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Regarding material participation in rental activities:

A real estate professional taxpayer generally must establish material participation in each rental activity separately. However, the taxpayer may elect to aggregate/group all of their interests in rental real estate for purposes of determining material participation. Material participation generally means non-passive treatment and allows for deductions and avoidance of the net investment income tax if the activity generates income

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For any tax year, a taxpayer or their spouse qualifies as materially participating in a venture if they satisfy any one of the seven material participation tests. if you don't group you must meet any one rule for each rental 

• Test one: You participated for more than 500 hours.
• Test two: Your activity substantially constituted all participation.
• Test three: You participated for more than 100 hours and no less than any other individual.
• Test four: The activity is a significant participation activity, and you participated in it along with all significant participation activities, for more than 500 hours. A significant participation activity is a business in which the taxpayer participates, without qualifying for any of the other six tests, for more than 100 hours.
• Test five: You participated during any five of the preceding 10 taxable years.
• Test six: The activity is a personal service activity and you participated for any three prior taxable years. Personal service activities are activities in which capital is not a material income-producing factor, such as health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting.
• Test seven: You participated for more than 100 hours and (based on all the facts and circumstances) on a regular, continuous, and substantial basis

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if you group and then sell the sold property is included for the period held.