I made aggregation election for 3 rental properties and have included a statement regarding such. Should there only be one safe harbor election as Lacerte is making 3?

[skojima]

Lacerte makes safe harbor election for each rental property but shouldn't it be only one election for the real estate enterprise?

[itonewbie · Accepted solution]

Notice 2019-07 is not specific about this but my view is that one statement listing all three properties should cover all of them as one enterprise.

[TaxGuyBill]

Personally, it would seem to me that three separate elections could be interpreted as treating it as three separate enterprises.

[skojima]

Thanks, exactly what I was thinking.  I'm going to call Lacerte technical and see what they have to say about this issue.

[itonewbie]

@skojima Could you also update us on what you find out from support?  Would be good to know. Thanks!

[jenni-davis]

I am trying to figure this out now. Any update on this?

[skojima]

Sorry guys been down with the flu.  Of all times.  I did speak to Lacerte technical and it was not very informative.  Regarding the separate safe harbor elections, technical said that that is a tax issue that he was not supposed to comment on.  He did say that for aggregated properties he believed that one safe harbor should be made but he could not tell me how to do this since Lacerete was creating three separate safe harbor statements.  So I prepared a safe harbor statement indicating my client's three properties and had client sign and attached as a PDF.  Since the safe harbor came out in 2019 it can be used for 2018 if you are to follow Notice 2019-7.  I believe that confirmation from client that they can meet the 250 hours requirement should be obtained or least discussed with client since they are signing under penalty of perjury.

[itonewbie]

I do make sure the my clients who opt for the safe harbor are able to substantiate that they met all the conditions in 2018 even though they may not have the contemporaneous records available - the IRS says they don't require contemporaneous records until 2019 but that doesn't mean they don't require ***any*** record.

Thanks for the update and hope you feel better soon.

[jenni-davis]

Thanks! I ended up doing the same thing. I created my own PDF and included all the properties.

[itonewbie]

Here's also another version from Spidell for reference: https://www.caltax.com/spidellweb/public/editorial/199asafeharbor.doc