Paul2695
New Member

I own my property outright how do I right off rent for my business which is in a separate building

I own my property outright how do I right off rent for my business which is in a separate building?

 

Do I have to claim the rent as income personally.

 

I am a DBA and not an LLC

Business & farm

I own my property outright how do I right off rent for my business which is in a separate building?

"rent for my business which is in a separate building

as rent expense on schedule C. (assuming your business isn't a partnership or corporation) 

Do I have to claim the rent as income personally - explain! where does the rental income come from?

Business & farm

Do you mean your Sch C business is "renting" from you personally in a building you own ?   

Carl
Level 15

Business & farm

I own my property outright

So who is renting what, and from whom are they renting it?

Paul2695
New Member

Business & farm

Sorry, I thought I made it clear but I didn't think about all the details.

 

I own the property that my house and shop are on outright.

 

In the past I had a shop on the property that I owned but was making payments and handled like a home office and just made a ratio of square foot like a home office.  Utilities weren't separate.  I have separate utilities now but not sure how to right off 'rent'.  If I was making a mortgage payment I could make a ratio of square foot but...  If I have the business write a check would I have to have 1099 misc. to me personally?  To me it wouldn't seem so since it is just a DBA.  Not sure how to make this work.  I worked at getting house paid off and was able to deduct percentage of that and don't think its right that I can't have some kind of deduction now.

 

Thank you for your time thinking of this and replying.

Carl
Level 15

Business & farm

You're dealing with what the IRS referrers to as a self-rental. The IRS has special rules for that, and I'm just not familiar enough with those rules to be of any help. Hopefully, someone else can jump in here. Meanwhile, I would suggest you google "IRS SELF RENTAL" and start reading. From what I see, there's a fair number of pitfalls with that for a business the IRS considers a disregarded entity. (Your sole proprietorship/DBA/single member LLC is a disregarded entity as far as the IRS is concerned.) But I'm not knowledgeable enough on that front to even express an opinion.

M-MTax
Level 10

Business & farm

You can't rent property from yourself and that's what you'd be doing if you're a sole proprietor or a single member LLC. The usual way to handle this would be to set up something like an S Corp for the business and then rent the property to the S Corp. The self rental rules would come into play then but that states that the rental income is non passive instead of passive.