Leasing privately held real estate to one’s own company is a legally permissible strategy. This involves a formal agreement where the individual, as the property owner, becomes the landlord, and the business, as the tenant, occupies the space for its operations. For example, a physician could lease their personally owned building to their medical practice.
This approach offers potential financial and operational advantages. Establishing a clear landlord-tenant relationship can create a deductible business expense for rent payments, potentially impacting tax liabilities. It also provides a degree of separation between personal and business finances, simplifying accounting and potentially shielding personal assets from business liabilities. Historically, this practice has been employed by business owners in various industries, often as a means of optimizing asset utilization and financial management. The legal and tax implications have evolved alongside broader business regulations, necessitating careful consideration of current guidelines.
