LLC Renting a Residence to be Office / Living space.

2 Replies

Not sure this is the right place, but google searches kept pointing to threads here (but none exactly like this). Thanks in advance.

I have a sole member LLC, taxed as an S-corp located in NY. Currently out of my apartment and with 3 other employees (online, computer work, no clients in person). That's kept expenses down the past year, but feels like it's getting time for more space.

Me (I'm an employee) and two of the other employees are thinking of getting a space together and having more room for the office space. A large house, and I've seen a few for rent, that have the room structure in which it would work. My concern is if  and how this could be legally done.

1) Ideal plan. The LLC rents the house, the entire house is an expense, and the rooming is a perk of working for the company.

2) LLC rents the house, the entire house is an expense, and us three employees pay a rental fee for our room.

The third idea, would involve me renting the house, and have the employee living space and the work space as an expense by percentage. Rooming would then be either a perk or paid as a rent to the LLC.

I think one or two should be fine, but me being the owner I imagine makes it trickier and the IRS I know can get strict in certain areas. In the future, I could see this as something to do with a property to own as well.

Any advice would be great. I would of course meet with an accountant and lawyer to have all the proper paperwork done if this is possible.

@Alex B.  It's best to talk to an accountant that knows your specific situation to get the best advice. Good luck. 

Yeah, I figure talking to one in person would be best. Just wanted to see if it would be possible, before setting up the meeting. Thanks for the input!

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