If I rent a second home used as a business that I do not own, am I still entitled to any tax deductions?

by Michael A. Gillen, CPA | Mar 09, 2018

If I rent my second home (no personal use) to a business owned by my mother, am I at risk of not being able to take advantage of tax deductions because of the personal use rules? Does it matter if it is a pass-through entity or closely held corporation?

As long as you have no ownership interest in your mother’s business and the rent charged is fair market value, the personal use limitations should not apply to you. In addition, the type of business of the tenant, whether a pass-through entity or closely held corporation, has no tax reporting implications to you. See IRS publication 527 for additional information, including where and how to report on your federal income tax return.

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Answered by: Michael A. Gillen, CPA, is director of the tax accounting department at Duane Morris LLP in Philadelphia.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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