Are there any tax advantages to purchasing a house under your company's name and then renting it to yourself vs. buying it outright as personal property?
As a business, you can claim all the repairs as expenses and deduct them from your taxes, but I don't know if there are limits or disadvantages. What are the other pros and cons in terms of taxes? I am aware businesses can have properties in two different states.
Replies (1)
Please login or register to join the discussion.
As with many things in the tax world this depends a lot on your specific situation which usually means actually talking with a CPA.
As a rule of thumb I would say it would be best and simpler for you (and your spouse if married) to own the home though it does somewhat depend on whether your business is a S-Corp and reported on your Schedule E or if your business is a sole-proprietor reported on a Schedule C.
If you are a S-Corp you do not want the business to own the house. What is instead a common practice is for the S-Corp to pay rent to the owner for a dedicated work space and then the owner can in turn write off the share of the property used for business purposes that is rented out to the S-Corp. This can help reduce your S-Corp income and offset sources of passive income.
If you are a sole proprietor you can already write off the business use of your home by filing IRS form 8829 and attaching to your Schedule C. However, if you do have a separate entity who owns the home, aside from yourself or the sole proprietor business, you can "rent" the space and in turn shift the money to your schedule E and this allows you to avoid self-employment tax. However, this needs to be structured properly as was laid out in the tax court case "[***] v Commissioner"
Lots more I can say but as I said in the beginning, you really need to call and talk with a CPA for your specific situation.