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I rent my primary residence(I am a renter), and am wanting to rent it to my business (Scorp) for business meetings 14 days of the year. Does this still qualify for both the business expense and the non-reported personal income?

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    meetings with whom? does your lease allow business activities and/or sublease? What kind of documentation are you going to have? If I were an IRS auditor I'd treat it as an attempt to evade taxes on whatever "rent" you're paying yourself.
    – littleadv
    Aug 22, 2023 at 16:59
  • accountants/bookkeeping, business partners, and advisors. It would be a monthly business review. The lease allows for subleasing and business activities (home office). Meetings would be set up in advance, minutes taken, etc. Rent would be fair market rent for renting a business meeting space. I have read some different articles, such as this below, but no clarification is ever provided on whether you have to own the personal residence vs being a renter. financiallysimple.com/…
    – rob
    Aug 22, 2023 at 17:15
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    I see no way how you'd be able to justify this to an IRS auditor as a reasonable expense. Will you literally move out of the apartment, remove all your personal property, and ensure there's absolutely no personal use during the rent duration? I don't think that's something you'd be able to do.
    – littleadv
    Aug 22, 2023 at 17:30
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    You're not getting it. Yes, people report bogus expenses all the time. No, you don't want to be the one who got caught.
    – littleadv
    Aug 22, 2023 at 18:33
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    no, there's no such IRS response. What you can actually find on the IRS website is the rules on home office deduction, which the answer below links to. These rules require, for example, exclusive and regular use. Renting your apartment for 1 day is neither exclusive nor regular.
    – littleadv
    Aug 22, 2023 at 20:19

2 Answers 2

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Your question is a bit unclear but I am assuming you live and rent in a residential domicile and want to claim part of the cost as a business expense.

The IRS allows this provided you meet certain qualifications. Keep in mind what might be allowable one year may change in the future. The best bet is to check the IRS Website on the subject. And to so so each year.

Being a renter or homeowner does not change the test which might be the gist of your question.

This is something, I feel, that many small business owners and independent contractors play fast and lose with. Depending upon your local government and HOA they may make the job of the IRS auditors easier. Are there strict zoning requirements that prevent the running of a business? Are there local tax laws that require licensure and tax self employed income? Is there limited parking at your residence? etc...

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    Worth mentioning that the business use of home deduction is one of the most obvious audit triggers.
    – littleadv
    Aug 22, 2023 at 17:40
  • This is different than the home office deduction. This is a business expense to your s/c corp, where it IS valid to rent space for the purpose of business meetings. With the complexity of my business, having a 1 day per month business review meeting is needed anyhow. Its a justifiable use of a full day. The main question is whether or not being a renter of my primary residence vs being an owner of my personal residence makes a difference (the rule states that you can rent out your personal residence for less than 15 days and do not have to report it as income). 280a rule
    – rob
    Aug 22, 2023 at 18:37
  • There is no HOA (I rent a single family home directly from an owner, and have no sublease clause, and do have allowance for business activities allowed), and the county home business rules allow for 4 clients or employees max at a time. You can run a counseling/services business with no issue in this jurisdiction. It's not in city limits.
    – rob
    Aug 22, 2023 at 18:41
  • I would stick with the IRS's "exclusive use of the space" clause. If you have an office or consulting room which you are careful not to let your non-business life intrude into, even if it isn't blocked off by walls, you can probably get away with claiming a proportional percentage of your rent as business expense. But I don't think dividing it by time would be accepted. I'd strongly suggest that before trying this you talk to a tax accountant; the exact details may matter. (I could have moved all the non-work stuff out of the bedroom I use as a home office... Not worth the effort.)
    – keshlam
    Aug 23, 2023 at 15:44
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S-Corp doesn't exist from the IRS perspective. It's all you. The whole point of S-Corp is to be a "pass-through" entity for income tax purposes.

As such, S-Corp renting your residence is essentially you renting your residence from yourself, and this is a tax neutral transaction. It's neither a deduction nor income, no matter the duration.

You're trying to use the 14-days rental rule to exclude S-Corp income from taxes, but this can't work because you're renting from yourself. It could have worked had it been someone else's S-Corp, and you'd rent them your home for up to 14 days - then the owners would be able to take a deduction and your income would be excluded for tax purposes.

But no, in the scenario you're describing it cannot work.

What you can do is a home office deduction, which requires exclusive and regular use. You can designate a room in your home which is used solely for conducting your business (not once a month - exclusively all the time), and deduct all the expenses related to that room. Home office deduction is considered one of the more obvious audit triggers.

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