Rental Property Safe Harbor Rules

[syoung123]

Hello, I have three rental houses, two had net incomes and one had a net loss in 2024.  I have the rental houses for over 10 years and have not used the “safe harbor” rules for rental properties.

1. Can I start using the safe harbors rules even if I have not used it in the previous 9 years?
2. If I can use the safe harbor rules, can I use it for one year, and don’t use it for another year?
3. Since I have two houses that had net incomes and one had net loss, can I use the safe harbor rules only on the two houses that had gains, but not use the safe harbor rules for the one house that had a loss?  Or do I have to use safe harbor rules for all three house?

[RobertB4444 · Accepted solution]

1. Yes.  You can use the safe harbor rules in any year where they apply to you.

2. Yes.  If you qualify this year but not next year you could use the safe harbor rules this year and not next year.

3. No.  The safe harbor rules cover the activity, not the individual properties.  Since the activity (rental services) meets the qualifications then all of the activity is included.

Just as a reminder, in order to meet the safe harbor qualifications you must-

• have 250 hours of rental services between you and people you hired
• keep the rental books separate of all other activities
• not use the property as your personal residence or have a triple net lease
• not lease the property to a business over which you exercise control

@syoung123 

[syoung123]

Thank you for you reply.  For the hours and bookkeeping, if I have the property mgt companies for the three properties, I can add the total hours that all three companies spent, and the time that I spent to meet the 250 hours requirement ?

[DianeW777]

Yes, because you are the overseer of all activity and the property managers that you  pay for their services. You also make all decisions for the properties. 

@syoung123 

[syoung123]

Thank you all

[syoung123]

Thank you all.