IRS Tax Tip: Tax Deductibility of Small Business Rent (IRC §162)

Small business owners should keep in mind several things when it comes to deducting rental expenses, the IRS stated. Leasing versus purchase impacts the deductibility of the payments, the IRS noted. Additionally, a rental deduction is disallowed for unreasonable rents paid, the IRS cautioned. A business owner’s workplace can be in their home if they have a home office that qualifies as their principal place of business. If a business pays rent in advance, it can deduct only the amount that applies to the use of the rented property during the tax year. A business can usually deduct the costs ...