Benefits of Home Office Leases…

There is a tremendous advantage for a business that rents a home office from the individual entrepreneur.

Rent for the use of property to which the business has no title and in which the business has no equity can be deducted by the business as a trade or business expense if the rent is paid in connection with the company’s trade or business, is ordinary and necessary, and is paid or incurred during the taxable year.

The home office lease provides the company with a framework for a business deduction for the amount paid to the employee, shareholder, officer, director or independent contractor. It provides the shareholder of a corporation or member of an LLC a framework for creating a home office deduction when allowing the company to use a portion of the individual’s home as a work place, storage, or garage for the company vehicle. The home office lease allows for the reimbursement of business expenses for employees of the company as working condition fringe benefits excludible from wages. It documents the actual commencement date and length of the lease agreement and allows for automatic renewals of the lease agreement to avoid additional lease preparation costs in the future. It is a legally binding, written lease agreement between the company and the employee, officer, director or independent contractor for use of a portion of the home. It complies with state law which generally requires all leases of real property for more than a stated period to be in writing.

If you still have questions about how you can benefit from a home office lease, call your attorney or CPA

Written by Spiegel & Utrera, P.A.’s

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