Is it even allowed in this situation? No. the S-corp cannot take depreciation and interest expense deduction for property it does not own. Without you personally having some sort of rental income, I don't see a good profit motive. It might work if the LLC/S-corp (i assume that the election has already been made) paid you fair rental for the use of the property. However, this could be complcstad because of the self-rental rules. As is the interest might be deductible but not on schedule E but schedule A as investment interest which won't be deductible unless 1 you itemize and 2 you have investment income to offset it. seek professional guidance.
