Tax liability may also depend on whether you are the sole owner of the LLC. In addition to consulting a CPA/tax advisor, you may want to consult a business organization attorney, or at least the attorney that drafted your LLC agreement.

Michael Healy I am not sure why you would want to rent to yourself. The IRS contends rentals to family members, even at FMV, are considered personal use days unless the family member uses it as a main home. You wouldnt meet the second criteria as this rental would not be your primary residence. So any use by you (other than maintenance & repair) would be considered personal days. You paying FMV rent does not avoid the personal use days clause.It does not make sense to pay rent to the LLC. I would review the vacation rental rules thoroughly and then decide how you want to use the second home. If the LLC needs money you can either loan it and charge interest on the loan or contribute it as capital.

Thanks @Matt Wills thought it was something like that. In our situation it's if we can't find him a rental and it would definitely be his primary. We would not be using it personally and would formally lease it etc. If there are no other good option we might need to go this way. For our vacation rental I know even donated use is considered personal

@Colleen F. FMV rental to a relative is not an issue from a personal use standpoint if the rental is the relative's main home. Non rented days and other personal use may still apply for days you use the property.

I am not sure how you would do this, it is probably also a legal issue and for an LLC since you may not want to damage your corporate protection for a 2 week vacation. For a personally owned property you just allocate a percentage to personal use and a CPA can tell you how to manage that. I also was wondering whether a FMV rental to a relative is an issue. Not preferable but it may be the only solution to finding a place for a relative.

Watch out for "self-dealing". You might be able to rent out a vacation home for a year and you happen to occupy it for 2 weeks. That might be OK. Conversely, you have a vacation home that is empty 50 weeks of the year, occupied by you for 2 and you claim a nice business loss: get a new nice orange jump suit! Jim.

Updated almost 9 years ago on 10/10/2016. Most recent reply presented by

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Michael HealyPoster

Investor
Great Barrington, MA

Tax, SDIRAs & Cost Segregation

Renting to yourself?

Michael HealyPoster

Investor
Great Barrington, MA

Posted October 04, 2016 05:56

So I understand I will need to consult a tax professional. But I'm wondering about perspectives on renting to yourself...i.e. You personally pay your LLC for use of a unit...in this case it would be a for use as a second home since I invest away from where I live Are there reasons you would or wouldn't do this? Or is it better to just make owner contributions?

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Jerry W.

Investor
Thermopolis, WY

Jerry W.

Investor
Thermopolis, WY

ModeratorReplied October 10, 2016 22:28

@Michael Healy, you can rent from yourself, but why would you? There is no tax benefit from making more money to pay taxes on. You might be able to deduct the rent if the stay is purely for business reasons, but why go through all the hoops when you can just stay for free?

Jerry W.

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