Renting to LLC

Today TaxMama® hears from RJ in the TaxQuips Forum, with a travel question. “I am a single member LLC. I have a long-term (3 year) out-of-state contract, which requires me to be physically onsite at the client’s location 75% of the time (3 weeks per month). I am currently renting an apartment and deducting the rent as lodging expense, in addition to my meals/groceries/utilities/etc. If I buy a condo at the remote location, can I “rent” the condo to my LLC (at fair market rent) and use the property on my personal return as an income producing property (I own several other properties so I currently file a schedule E). Eventually, when the contract ends, I intend to rent the property to other tenants.

Also, Is it better to use actual living expenses or GSA per diem rates? My work location is Juneau, AK which has a very high cost of living and a generous per diem rate. My legal residence is Virginia.”

Dear RJ,

If you have a three-year contract, the IRS does not consider it temporary. Juneau IS your tax home.

You do not get to deduct any of the lodging or meal expenses.

Temporary means under a year. This is the kind of thing to research with a tax pro BEFORE accepting the contract. If you had known, you could have negotiated a higher fee to account for the duplicated expenses in Juneau and Virginia.

Sorry to be the bearer of bad news. But – under no circumstances should your LLC be involved in paying this rent or any of your travel expenses.

And remember, you can find answers to all kinds of questions about travel expenses and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Leave a Reply