Own commercial building, I use 2 of 7 offices for medical business- pay myself?

[Sanjai Dayal]

The commercial office space is owned by my LLC. I need to allocate a certain rent to pay myself as I use 2 offices working as a medical provider (another LLC). The higher the rent, the better for tax purposes. Is there a limit to how high I can go? Does it need to be market rent and comparable to the other offices with tenants?

[Doug Smith]

Many of our borrowers/clients have one LLC that owns the building and another than own the operating business. It's not uncommon, and actually normal, for the operating entity to lease from the LLC that owns the building. If you ever decided to sell the building but keep operating the business, it makes it much easier. I would keep it at "reasonable market rent" (whatever that means). Ask yourself if the IRS tried to say you were over/underpaying and they want $ from you, could you defend the lease amount? Would the rent amount seem unreasonble to a buyer if you tried to sell it. I'm not sure I would get to cute trying to squeeze every time out of it now with a lease that might cause you issues in the future, but the scenario you describe is common and probably smart.