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.
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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.
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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.
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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.
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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.

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