Discussion:Club dues paid for rental property
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Discussion Forum Index --> Advanced Tax Questions --> Club dues paid for rental property
Discussion Forum Index --> Tax Questions --> Club dues paid for rental property
| 30 March 2009 | |
| I have a client that purchased a rental property in South Carolina. In order to be competitive with other properties, they joined a country club that allowed their renters to be able to golf and dine at the club. Publication 463 is clear that club dues are nondeductible. Are there any exceptions if these expenses are for a rental activity versus if they are for business purposes? | |
| 1 April 2009 | |
| To clarify this situation, client lives in Indiana and rental is in South Carolina. Rental sits on an island. To be competitive with other rentals on island, they joined this club. | |
| 2 April 2009 | |
| Seems to me that is the club membership is an amenity for the rental (and not for the personal use of the lessor)it would be a legit expense since the rental charge is obviously higher to cover that. Without the membership the rent woudl be lower or perhaps one could nto rent the property at all. Not really any different than if the rental came with cable tv or utilities. | |
Rgtaxservice (talk|edits) said: | 2 April 2009 |
| Sounds like the owners jointed as members and the renters get to go as guests. Do guests have to pay anything? | |
Rgtaxservice (talk|edits) said: | 2 April 2009 |
| It might be different if the membership was solely in the renter's name. | |
| 2 April 2009 | |
| MAYBE - you meet the exception under Sec 274(e)(8) for entertainment sold to customers, this includes the use of facilities. | |
Rgtaxservice (talk|edits) said: | 2 April 2009 |
| 274(e)(8) still wouldn't apply if the membership isn't in the name of the renter. | |
| 2 April 2009 | |
| This is a rental condominium and is rented out to different renter's throughout the year for short periods of time. The club membership is in owner's name. One time expense to join was $20,000 and then they pay quarterly dues. | |
| 5 April 2009 | |
| I guess you'd have to capitalize the one time $20,000 expense, but I think the quarterly dues are an expenses as the rental fee charged includes the use of these club amenities. I am sure Congressman Chuck Rangel would be deducting that and he surely should know if it is right or wrong because he is the Chairman fo the Ways and Means Committee. | |
| 6 April 2009 | |
| I believe the disallowance is absolute -- regardless of how the tenant treats the expenditure. | |
| 6 April 2009 | |
| Tenant: How much is the rent?
Lessor: It will cost you $1,000 a month; $850 is for the rent, and $150 is to reimburse me for the $150 monthly Club Membership fee that goes with the apartment. Unless the lessor is a Congressman - then "It will cost you $1,000 a month. $500 is for the rent, $150 is to reimburse me for the monthly Club Membership fee that goes with the apartment, and $350 is a contribution to my campaign fund. | |
| 6 April 2009 | |
| I had a Condominium on Bald Head Island, North Carolin - in the 1980s and rented it our when I was not there.
The Club membership was required for any "Renters" to use their amenities - Golf course, pool, dining, etc. The rube was - the "Private Club" was remote - that is if the Renters could not use the Club - they had a 3-mile trek to the nearest restaurant, and they were barred from the other facilities. Therefore, in this example, is the membership "ordinary and necessary" for the Production of Income? If so, then the cost of getting the Membership would be deductible in some time period, unless the view is taken that the Fee to get in would never expire. | |
