Can I rent a house owned by my S corporation?


T

TAXQA

I want buy a house for business. There are two approaches
I know:

1) I have my S corporation to own a house, and I rent the
house completely. Then I use 50% of house for business.

2) I own a house, and using 50% of the house for business.

3) There must be some other ways ...

Could any TAX experts give a comparision? What's pros and
cons?

Thanks

TAXQA
 
Ad

Advertisements

M

Michael T Wing CPA

Taxqa said:
I own a house, and using 50% of the house for business.
If you are really using as much as 50% of the home for
business, be sure to check local zoning ordinances. In most
areas where I've lived, such a high percentage of use would
not be permitted and/or would require a zoning variance.

"Whose going to know," you might ask? You'd be surprised at
how this kind of thing can sneak up and bite you on the
behind. Plus, there is at least the theoretical possibility
(admittedly a long shot) that the IRS could disallow
deductions related to such a high percentage of use on the
theory that the use was "illegal."

MTW
 
J

Jo Firey

If you are really using as much as 50% of the home for
business, be sure to check local zoning ordinances. In most
areas where I've lived, such a high percentage of use would
not be permitted and/or would require a zoning variance.

"Whose going to know," you might ask? You'd be surprised at
how this kind of thing can sneak up and bite you on the
behind. Plus, there is at least the theoretical possibility
(admittedly a long shot) that the IRS could disallow
deductions related to such a high percentage of use on the
theory that the use was "illegal."
There are good reasons why a neighbor would complain. While
a home based business might not impact the neighborhood,
chances are they would notice. Then they feel there is a
danger that if it is allowed to continue for too long,
business use will be "grandfathered in" for the house and
they will have no recourse if a more disruptive business is
started.

And some neighbors are disturbed by as little as daily UPS
and FedEx deliveries.

I didn't draw the line on our neighbor's in garage cabinet
shop until his employees started arriving with their lunches
and parking in front of my house and the smell from glue etc
was overwhelming. And he was really pissed that he got shut
down.

Jo
 
Ad

Advertisements


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top