Rent to My S-Corp?

FIRM1040 Blog

Rent to My S-Corp?

April 16, 2017

 

My tax professional tells me that IRC Section 280A allows me to rent my entire home to my S corporation for 14 days or less during the year and get big tax deductions.

 

In the example, he explained that I could charge my S corporation $1,500 for each day of use. This rate equals what I would have to pay to rent a home that’s pretty much like mine. Say I rent the home for 14 days. That gives the S corporation a $21,000 tax deduction for the year.

 

He next explained that on the personal side of the ledger I don’t get any tax deductions for the rental of the house, and I also don’t include the rental income on my personal tax return.

 

Because I operate as an S corporation, this strategy creates a net $21,000 tax deduction when passed through to me.

 

This seems almost too good to be true. (That’s the story that my client told to another client.)

 

I agree that this story does sound almost too good to be true. But the truth of the matter is that this result is embedded in the law and it’s available to you. There are some rules of the road that you need to follow so as not to shoot yourself in the foot, but nothing that’s difficult when you know what to do.

 

I think we should spend some time discussing the possibilities of your renting your home to your corporation so as to take advantage of this tax benefit.

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