New York City, NY · Member since 2015 · 125 posts · 48 votes
I have a two family house, with one unit given a discounted rent that's about $300 month below market rate. In exchange, the guy in this unit acts a caretaker and general handyman for the property, and does tasks like lawn care, snow removal, and basic repair work.
Am I able to deduct this $300 from my taxes as a business expense? My understanding is that if I charged him full rent, and simply paid him $300 every month for his services, that would be deductible, and at the end of the day, this works out to basically the same thing.
Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
9y
You answered your own question. The alternative arrangement would be him paying you an additional $300 and you turning around and paying him $300/month for his services. Technically speaking, you are charging him reduced rent in exchange for his services. His services constitute income to you - in this case $300. So you would include the $300 as income but then just deduct it thereafter. You get to the same place.
Investor · Clifton, NJ · Member since 2017 · 53 posts · 54 votes
9y
Wouldn't not paying taxes on the $300/mo taxable income accomplish the same thing? So if the rent is lower, you're already not paying taxes on it? Is this too simple? Am I too simple?
Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
9y
You answered your own question. The alternative arrangement would be him paying you an additional $300 and you turning around and paying him $300/month for his services. Technically speaking, you are charging him reduced rent in exchange for his services. His services constitute income to you - in this case $300. So you would include the $300 as income but then just deduct it thereafter. You get to the same place.