How to avoid the “self-rental” trap

Here’s the “self-rental” story in a nutshell:

You own a business that needs office space… So you buy a building and rent office space to your business… You collect the rent and depreciate the property… Your business gets to deduct the rent it pays you… As a result, the money never leaves your pocket.

Sounds great, right? Well, it is if you know the special rules that apply and make sure your arrangement will meet with IRS approval.

Want to find out how to avoid big problems and come our a winner?

Read my new article titled Tax Tips: Self-Rental Trap Still Costing Business Owners Tax Dollars.

Three ways our fact-filled article can help you:

1. We’ll explain the self-rental trap. As you may know, rental activities are passive activities. Which means you have to jump over a number of hurdles before you can deduct your passive losses. And the hurdles get even higher when it comes to self-rentals. We’ll show you how to stay out of hot water when you read the full article.
2. We’ll tell you about the important Williams case. In this recent case, the gentleman behind a self-rental arrangement argued that his rental property should be granted passive treatment. The Fifth Circuit Court disagreed and Williams lost the offset of his self-rental income against his passive losses. We’ll show you how to avoid William’s fate when you read the full article.
3. You’ll learn why “grouping” may come to the rescue. You can treat your business and the rental activity as a single activity (for the passive-loss rule) under a special rule called “grouping.” With the self-rental grouping election, you have one activity for tax code purposes. Any income or loss from the grouped self-rental is simply part of the business for tax treatment of income and losses. You’ll get all the details when you read the full article.