Second Home - Occupy Upstairs
Hello, I want to ask those of you smart people if you think I have a good plan and help me find the pitfalls.
I live in Utah County. We have a home in Highland and it's worth about $700k (owe $200k). I run a t-shirt business and also rent out a warehouse in PG for $1200k per month.
I'm getting tired of my PG warehouse. There's a lot of creepy humans that hang around there and I work in it alone as a female and don't feel safe. Also, that $1,200k makes up a good chunk of my expenses and I'm not getting equity from it.
So here's my plan. I will buy a second home that has some sort of rental area, either an outbuilding or a basement that I can rent out to help cover expenses and run the business out of the remainder of the home. I'll need at least 1500 square feet to keep inventory. I've been looking on the market and see a bunch that pop up that will fit my needs.
I've done the math and if I buy under $300k, and am able to rent out a basement at $1000k plus utilities, I will still be paying a little of the mortgage, but at least it will go toward an investment instead of my warehouse owner.
I guess I wonder if it's legal to not occupy the home, but rent out part of it and run a business out of another part. No customers will visit the premises. I won't be sleeping in the house either. I also won't be selling my house.
I was thinking of opening up a separate LLC and rent that floor space to my business' LLC so I can claim it on taxes. BUT--I think I heard you can't do that because it would be an illegal duplex because TWO entities would occupy the house.
Anyone know? Does the plan sound ok? As long as I am smart about my renters, locking up inventory, etc? Any pitfalls you can think of?
Petra