Can I Pay myself rent?

[Patrick Howell]

The question is pretty straight forward....

We're selling our personal home with the plans of building a future long term home. In the meantime, we have the opportunity to live in one of our rental properties until we get things moving (could be 6-12 months). Some more details... All of our rental properties our owned by a single member LLC with myself as the sole member. I was thinking myself or my wife could write the corporation a monthly rent check just like a normal tenant would just so the business would maintain an income stream on that property. What's everybody's thoughts on doing something like this? Is there a better, more preferred way? Cheers,

[Jon Holdman]

I'll second Mark, talk to your CPA.

However, I believe there are consequences you don't want. Specifically, you'll convert the property from a rental to a residence. IIRC, if you use a rental for more than 14 days a year, you're considered to have "used it as a home" and you will lose some of the deductions you could otherwise take. The IRS has documents, such as:

Pub 527 Chapter 5

Keep in mind a LLC is a pass-thur entity and has no consequences for taxes, unless you've requested corporation tax status.

I believe the bottom line is no, you cannot pay yourself rent. So, you won't have the income (to potentially pay taxes on) but you will also not have the deductions or depreciation.

You MUST discuss this with your CPA before you do it.