How to structure owner occupied office space with tenants

[Account Closed]

So most people seem to recommend an S corp for flips (and new construction specs), and an LLC for long term holds. I've adopted this tax strategy, and my LLC has now purchased an office building. The building has 5 key man offices, where everyone would share restrooms, a kitchen, and two conference rooms. Utilities are included in the rent as well. I use one office and rent out the other 4, but I'm wondering if there's a superior way to structure the rent from the space I occupy. For instance, should my S corp pay rent to the LLC (and thus get the deduction), or would that be a wash with the income my LLC would get from the rent?

As a side note, my CPA told me I'd have to prorate all utilities for the sq footage I occupy vs the sq footage I rent out. It seems to me, if my S corp rents the space from the LLC, then I wouldn't have to prorate bc all offices would now be rentals. If that's the case, even if having the S corp pay rent doesn't give me a tax benefit, I think I'd still prefer this method due to less complication and prorating of bills.

Does anyone have any ideas? I'd like to see the best way to maximize tax benefits. Thanks :)

[Account Closed]

Your scenario is sometimes referred to as the Cox Strategy...you can read some details here:

http://www.nysscpa.org/cpajournal/1996/1096/depts/fedtax.htm

Not sure about your prorating question. Two factors I would look at are which entity actually pays the bills and how the lease is structured.