Myth: Rent Furniture to Your Corporation and Save on Taxes

The Myth Behind Renting Furniture to Your Corporation

Many business owners believe they can save on taxes by renting furniture to their S or C corporation after personally buying office furniture. While this strategy sounds appealing, it generally does not produce any additional tax savings. In most cases, the corporation receives the same depreciation deduction whether it buys the furniture directly or rents it from you. Current tax law allows both new and used business furniture to qualify for 100 percent bonus depreciation when eligible, so the tax deduction is generally the same either way. In many cases, choosing to rent furniture to your corporation instead of having the corporation purchase it directly does not create an additional tax benefit.

Why Rent Furniture to Your Corporation Creates Complexity

Personal ownership can also create unnecessary complications. Renting furniture to your corporation may require additional tax reporting, increase the burden of record keeping, and (in some situations) expose the furniture rental income to self-employment tax. Attempting to expense the furniture under Section 179 can add even more hurdles. For most business owners, the simplest and most tax-efficient approach is to have the corporation purchase the furniture directly. This allows the corporation to claim the deduction without the added paperwork or potential tax traps associated with a personal property rental arrangement.

How We Can Help

Sterling Tax and Accounting is here to help your business with tax planning!  Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket.  If all your accountant does is file your taxes, chances are they are making you pay more than your fair share of taxes.

Learn how to proactively save on taxes by scheduling a call with our tax planning specialists. Our tax planning, accounting & business services help you stay on track. Sterling Tax & Accounting will work with you to optimize your business and minimize your taxes. We will work to provide you and your business with the tools and resources you need to build a solid tax and business foundation. We’re a trusted CPA Firm in Sarasota, Florida. We serve clients all over the US, and proactively work to minimize their taxes. Welcome to the Sterling Standard of business!  Want to learn more?  Schedule a meeting with our tax planning team.