Mortgage Payment Question

[Jasper Li]

I am currently renting one side of my Duplex and living in the other side. I’m collecting the rent into a business account which covers part of the mortgage. And also transferring money from my personal account into my business account to make up for the rest of the mortgage. And using the business account to pay for the mortgage. Are there any red flags with the way I’m doing this re taxes? 

[Greg Scott]

You may be worried about the wrong thing.

If your business account is just your account that you use for business, it won't impact how you do your tax returns. The IRS won't care which account pays for things. If you have an LLC that owns the business account and you have elected to be taxed as a partnership, then taxes are flow-through so I don't believe it would impact your taxes. Check with a CPA that knows your specific situation.

On the other hand, all the inflow and outflow of money sounds a lot like co-mingling of funds. Unless you have kept careful and proper accounting records, your LLC probably gets thrown out in any lawsuit. If you run your properties well and have good insurance, that may not matter, but I would be more worried about piercing the corporate veil than red flags to the IRS.