Buy a House through Business?

[Saajan Bhakta]

Hi All,

My father owns a motel (located in WI) and lives on property and works. He is planning to move across the border to MN (much cheaper health insurance) and live in a house and step away from day to day activity. The motel is under a corporation and with no mortgage. Credit is excellent.

My question is - can he buy a house ( valued at 500k+) while putting the mortgage under the corporation? We essentially would like to put the house mortgage through the corporation to get various deduction such as mortgage, real estate taxes, etc. Is there any other ideas or options for tax savings?

I have heard the hotel owners (or corps or LLC) also buy apartments and let employees live there (rent free) to entice them to keep working for the same company. Can we do something like this?

Any recommendations on who to talk to? I thought I would ask BiggerPockets community as I read posts time to time and learn a lot.

[John Woodrich]

@Saajan Bhakta although they are employees and receive a wage like certain staff employees they are not treated the same for tax.  The IRS would look at the house as a personal asset and not a business asset as it wouldn't have a business purpose...

I can't think of a good way to make this even gray for you.  You could maybe twist the facts if they had a personal residence they lived in that was far from the hotel, they needed a house nearby for staff and infrequently when they manage it...  But that wouldn't work here.

You mentioned the move was related to health care - have you considered the income tax consequences?  Income taxes are higher in MN than WI.  It would depend on their tax situation but tax increase may offset the cost of health insurance pretty quickly...