Keep land in personal name or business name?

Forum|Forum|3 years ago
February 1, 2023
2 replies
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Bought a piece of land in personal name and building an office building on it. The building is in my LLC S-corp but the land is still in my own name. I'm thinking for liability purposes to put the land in LLC too so it's not linked to my personal name. But I hear there's tax benefits to having the LLC pay rent to the landowner (me)?

What would be the pros/cons?

TurboTax Business Windows

Mike9241

no tax benefits that I can see except if your state has a separate income tax for S-Corps. then it saves it some state taxes. the S-Corp gets the deduction but you personally have rental income of the same amount. this would also be subject to the self-rental rules. In the case of a self-rental, income is treated as nonpassive and loss is treated as passive.

will the S-corp be getting a mortgage on the building that could be an issue if the land is outside of the s-corp

DavidD66

As Mike9241 said, When the self-rental rule applies, the IRS deems any income as nonpassive and any losses as passive. In other words, the self-rental rule gives you the short end of the stick when you have either income or a loss.

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