Can You Pay Your Own LLC Rent?

Question

Hello,

I currently own investment properties in Buffalo NY,  which are each treated as an LLC, and a single family home in which I live in San Antonio TX.  Is it possible/legal for me to transfer the ownership or sell my home to my corporation, or to another one I file, then pay myself rent, as well as deduct repairs and other property expenses that you cannot deduct from your personal residence through that corp?

Steven Hamilton II · Answer

Yes, you can; however, only for the personal portion of the building.  These may help:http://comptroller.texas.gov/taxinfo/proptax/exemp...

http://comptroller.texas.gov/taxinfo/proptax/pdf/9...

Rob Beland · Answer

Very creative responses but the simple answer is no. You would be paying yourself and the IRS does not allow you to create a taxable event with yourself. It's all your money. It's your LLC which is a pass-through entity and basically doesn't exist in the eyes of the IRS.

Steven Hamilton II · Answer

Actually your expenses would be disallowed as they are personal.  You will have comingled AND you will love homestead exemptions and capital gains exclusions.

Jerry W. · Answer

Yes you can, but why would you create taxable income to have to pay taxes on and set your house up so you cannot sale it at a profit without paying capital gains taxes?  If you rent it for less than fair market it may cause flags to go up for an audit.  I would talk to an accountant about how it works and even if it would be worth it.

David Thompson · Answer

I'm certainly no expert but will get the ball rolling. In Texas you have the homestead legal / tax benefit on your primary home so would think by moving your personal residence under a LLC structure you jeapordize those benefits.

Lawrence Rutkowski · Answer

Great insights, thank you all for the food for thought.

Leonard Maddox · Answer

sounds like good advice to me thanks for the information

Joe Moore · Answer

Good questions for your accountant or real estate attorney.

Mike Doran · Answer

What if instead of paying yourself rent, you turned the property into a perk of your position in the company? I know some property managers receive no cost rent as part of their package. Of course you would have to run all of this by your accountant or attorney as I am neither.

Can You Pay Your Own LLC Rent?

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