turbotax icon
turbotax icon
turbotax icon
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

flbxant
New Member

Can you prepay a mortgage and file as a s corp to lower the overall tax liability?

Example $7,000 annual net profit used to prepay mortgage balance down. Rental property is owned by an LLC.
Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions

Can you prepay a mortgage and file as a s corp to lower the overall tax liability?

No, this strategy will not work, as a mortgage payment of principal is not a deductible expense.

It helps the balance sheet but only interest payments are deductible on the mortgage.

View solution in original post

3 Replies

Can you prepay a mortgage and file as a s corp to lower the overall tax liability?

No, this strategy will not work, as a mortgage payment of principal is not a deductible expense.

It helps the balance sheet but only interest payments are deductible on the mortgage.

flbxant
New Member

Can you prepay a mortgage and file as a s corp to lower the overall tax liability?

My question pertains more closely to designating a salary of a sole owner of an S Corp. Lets take the $7,000 profit for example. I set a salary for myself to let's say $1,000 and use the remaining $6,000 to pay off the mortgage loan (Reinvesting in my business to lower future interest rate cost). Could this be done? And if so what do I pay taxes on?

Can you prepay a mortgage and file as a s corp to lower the overall tax liability?

In your example with some different facts, your K-1 would show the $6K profit and your wages paid to you would be $1K so the whole $7K is still taxable income to you.  
Note: if you do pay yourself a salary make sure that the employment taxes are filed on the salary.
Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies