Can an LLC purchase residential real estate that will be used as a home office pre-tax?

2 Comments

1. 

   OldJimmy

   January 10, 2012

   Is that all it will be used for? If all that takes place there are business activities, and no residential activities, it should be no different than any other building purchase by a business to conduct business.

   If it will also serve as a residence in some way, it becomes much more complicated. You would probably need the assisstance of a tax accountant to properly structure things so you get the maximum tax advantage without running afoul of IRS rules.

   This is also assuming that the local zoning ordinances or HOA restrictions/rules will allow this activity in the neighborhood. I would fear them a lot more than the IRS.

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2. 

   Kasey C

   January 10, 2012

   Disclaimer: NOT a tax attorney, just common sense and some book knowledge.

   You can’t claim ALL of it as a business expense, only the portion that’s used for the “home office”, i.e. that one room. You’ll have to pro-rate it from the square footage of the entire unit. In other words, same as if you incorporated and trying to deduct the “home office”.

   Getting a loan may not be a problem. Check with your real estate agent, and a lawyer that specializes in real-estate law, but it MAY be legal for you to sign the paperwork and get the loan, then transfer the deed to the LLC. The bank can’t really say anything as long as you pay the mortgage.

   You may want to take a look at “The Real Estate” book edited by Robert Kiyosaki. Articles are mainly written by his “advisors”, and one of them touches on the proper asset protection and ownership issues. Of course, nothing beats consulting a real estate attorney.

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