I live in Tennessee. About 15 months ago we created a wedding rental business. We lived in our home (home #1- 2400 sq/ft) and worked out of it until the inventory grew too much for our home. We purchased home #2 (1507 sq/ft) when we realized our business needed additional room. We did sell home #1. We purchased a much smaller home - primarily because it had a large 1500 sq/foot warehouse building behind it. The property is zoned multi-use (commercial-residential). The prior owner was using the home as an office.
We've done all the things to make sure its not a hobby business - commercial/liabilty insurance - registered with the state as a business (H&W sole proprietorship) - pay state sales & use taxes (we have an blanket tax exemption certificate, etc.
But now we're trying to figure out the tax impactions. We purchased the property for its commercial purposes - but happen to live on the property, as well. We have a home office in the residence (10% of livable space) but our business inventory is all over the house, as well, including most of the attached garage.
My question is , how can we get the best tax use from the property. Should we consider it fully commercial - and rent the home from our business (which is ourselves)? For tax purposes how should we treat the home, all of its expenses and the taxes and upkeep
We've done all the things to make sure its not a hobby business - commercial/liabilty insurance - registered with the state as a business (H&W sole proprietorship) - pay state sales & use taxes (we have an blanket tax exemption certificate, etc.
But now we're trying to figure out the tax impactions. We purchased the property for its commercial purposes - but happen to live on the property, as well. We have a home office in the residence (10% of livable space) but our business inventory is all over the house, as well, including most of the attached garage.
My question is , how can we get the best tax use from the property. Should we consider it fully commercial - and rent the home from our business (which is ourselves)? For tax purposes how should we treat the home, all of its expenses and the taxes and upkeep