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I live in a Condo in our BY/Law only allows 6 units to be…

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I live in a...

I live in a Condo in Virginia our BY/Law only allows 6 units to be rented. Noe the Board of Directors say a owner can start a business and he is the owner of the Condo and then rents of him self. for a tax write off. Is this owner a owner a rented or what is his statis.

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

Yes the Board said he is a owner and not counted as a renter, As i said we allow just 6 if not counted as arenter we could end up with 30 more or so .

Submitted: 7 months ago.Category: Tax
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Answered in 16 minutes by:
12/4/2017
Tax Professional: Lev, Tax Advisor replied 7 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,141
Experience: Taxes, Immigration, Labor Relations
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"Renting to himself" will not be considered as a bona fide rental contract and will be treated as a simple "use of the property."

There would not be true rental obligations...

That is because the landlord may not evict the tenant and may not sue the tenant for unpaid rent or for damages of the property...

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Tax Professional: Lev, Tax Advisor replied 7 months ago

However - if the owner have a separate business entity and that business entity files its own tax return - contractual obligations are possible between the business entity and the owner.

In IRS terms - it is called "self-rental" situations - when the business operations and the real estate ownership are in separate (while related) entities.

In general - that separation is for protection purposes - but would not provide any additional tax benefits.

Following IRS publication provides some additional details when dealing with self-renting

https://www.irs.gov/pub/irs-utl/2013_NTF_Self-Rental_Tax_Dilemmas.pdf

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