Deducting Rent

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The IRS defines rent as any amount that you pay to use property you do not own. Most of us are familiar with the concept of paying rent for office space, land or equipment. But you may not know that you can deduct part of your rent on your home, condo or apartment if you use part of it as a place of business. To do so, you must meet the requirements for a home office.  If you rent property from your relatives or a related company and the IRS deems the rent to be excessive, they will disallow the deduction. To avoid this, make sure the rent is comparable to what you would pay a non-relative. Contact a real estate agent and ask him or her to prepare comparisons of similar properties in the area to substantiate the rent you are paying to a related party.

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Tags: Business Expenses, Corporation, Deductions, incorporation, IRS, LLC, Record Keeping, Recordkeeping, Small Business Taxes

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