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Posted by arek on July 8, 2007, 12:38 am
Please log in for more thread options Paul,
Thank you very much for the feedback.
In other words it looks like the scenario I described would be no
different than my
wife just doing the typical home office deduction with 30 years
deprecation for renovation cost ?
- John
wrote:
>
> >I am building an addition to our house.
> > It will be used exclusively as my wife's S-Corp office space.
>
> > Total construction cost will be $30,000.
>
> > Can I take e.g. 60 month construction loan at apr. $500/month and
> > have her Corp. pay me $500/month rent fee ?
>
> > She would have business expense deduction and I would have
> > ( hopefully) zero additional tax liability because my additional
> > income would equal my expense .
>
> It may or may not equal out. You don't get to deduct your monthly
> construction loan payment in full.
>
> What you'll have, is rental income, off-set by the loan interest, some
> percentage of taxes, insurance, utilities, and depreciation on the $30K
> addition over 30 years.
>
> > Would it make a difference if I rent out this space as "myself LLC" ?
>
> You can't create a loss to yourself.
>
> Self-rentals like this have run up a number of court cases in tax or
> district courts.
>
> Consult with a local CPA or attorney about the potential problems that loom
> ahead for you.
>
> --
> Paul A. Thomas, CPA
> Athens, Georgia
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