Discussion:Rental Real Estate Between Related Parties
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Discussion Forum Index --> Consumer Questions --> Rental Real Estate Between Related Parties
| 19 May 2009 | |
| I have a client that owns a Calif S-Corp with his wife. He and his wife also are members of a New York LLC. The LLC just acquired a condo in New York. The stockholders want to rent the condo to the S-corp for business use when they travel to NY. They want to charge a monthly rent that will just about cover the interest, taxes, operating charges, etc. Basically, break even.
The S-corp is already renting an office in NY, so the corp files both NY and Calif returns. By increasing their NY rent they will pay even more NY taxes. The purpose of the condo is to eliminate the hotel charges. My client has asked me what is the best way to structure this rental that will be most advantageous tax-wise individually and corporate. I thought about the S-Corp paying the stockholders a per diem on the days they are in NY, but the related party rules prevent this. Does anyone have an thoughts or similar experiences? Thanks | |
| 20 May 2009 | |
| if the condo isn't rented to unrelated parties it sounds fishy to me.
would your corporation pay YOU to live in your own house? | |
| 20 May 2009 | |
| as seen here | |
| 20 May 2009 | |
| Actually, Illini, Alison of Champaign sings "take me to the river" better. | |
| 20 May 2009 | |
| MWPXYZ what is Alison's "handle"? I grew up 20 miles away from Champaign. | |
| 20 May 2009 | |
| They are not actually going to live there. They live in California, but they stay in New York about 15 days a year on business. In lieu of staying at a hotel, the LLC they created bought a condo which they will occupy when they are in New York. In years to come they will sell it hopefully for a sizable capital gain. | |
| 21 May 2009 | |
| Scbcpa - I suppose if your clients pay more taxes to NY they will receive a greater credit against their CA income taxes. By owning property, they undertake an additional burden of proving they were not in NY for more than 183 days and therefore become NY residents according to NY tax law.
Also, I have not followed recent developments in the NY budget process, but the Assembly passed a law thatincludes the gain from the sale of interests in certain partnerships and other entities in nonresidents' New York source income, to the extent attributable to ownership of New York real property. If CA considers the sale of an LLC interest to be a gain on an investment, it is possible both states cold collect taxes on the sale. Otherwise, considering the rent will be at break, even there seems to be no special structure that will create tax savings. Illini - I was referring to Alison Krauss. My wife grew up in Champaign; i do not believe I have ever seen such a flat landscape, not even on the ocean. | |
| 21 May 2009 | |
| Yes -- and do you know what people from Maine call visitors or transplants? ........... "Flatlanders" They also refer to you as being "From Away" if you were not born in Maine. ;-) | |
| 21 May 2009 | |
| Tell Alison I lived at 809 W. Pennsylvania in Urbana 1975-1979 when I attended the University of Illinois. I assume she went to Centennial High School? | |
