Running a business from home

[Newbie]

I know that the IRS allows you to write off the section of your home used in business but I was thinking of a reversal of that and was wondering if this was legal.

Buy/rent a home or apartment in the business's name and because your the owner/ceo/member have it in the employment agreement or benefits package that the business will locate you a place to life (you could pay rent to the business). The business will still be in one room and you live in the rest of the house but becuase the business owns the home, it pays the taxes and other expenses required to maintain the area and you just pay your rent. It gets the expenses and can write them off while your home is being maintained with pretax dollars.

So the question I have is, Would this be legal and if so, what do you think of the idea.

Keep in mind it was just an idea and I know nothing about this area.

 

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[Rem]

Depends on the state. Find a tax lawyer.

With me, working from home I couldn't write off unless my work space was located in a separate area from my living space and used that space only for work and not for family use. Not that they would know but you would have to have a separate room called an "Office" or section it off. Then, depending on the size you could write it off. That amount would then be divided by 3 and written over the course of 3 years. :coco:

 

[Runum]

Don't ever think that they won't check out the deduction. Jill and Bobo can share stories about this one.

 

[MJ DeMarco]

. Jill and Bobo can share stories about this one.

Yea, just as soon as they return from swimming with the dolphins off the coast of Cozumel. :urock2:

 

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[Newbie]

What deduction would they check? The business owns it and rents the areas it does not use to you. So from what I can see, there is no deduction for running a business out of your home because it would not be "your" home. Does everyone follow me?

 

[Runum]

I didn't say don't do it. My intimation is that it's not worth the write off if you're in it to play games. Your documentation must be airtight. It cost Jill a year and a bunch of money to defend herself and, IMHO, she was in the right.

 

[LagunaLauren]

I agree that whatever you do, make sure it's legitimate. You sometimes be creative and still be legal. A friend of mine bought a commercial office space with one of his companies for almost $8Million (worth $14Million now). His other company rents it from his first company that owns it. His payment is just under $50k a month, but his other company that uses the space pays just over $90k a month for it. By legally doing this, he maximizes cash flow and tax write offs, etc. He legitimately uses the space for business, though and does everything legally. If you can legitimately do a set up like this, then OK, but I agree that it's not worth the risk to try to pull a fast one on the IRS to save a few bucks.

 

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[CubbyGuy]

Your home could be purchased by your business, but the business would only be able to deduct expenses related to the business percentage use of the home.

If you were the owner of the business and your business rented the personal portion of the home to you this would not be a rental arrangement because it would be a related party transaction. Someone else would need to own the business.