J.K. Lasser's Small Business Taxes 2017

CHAPTER 12 Rents

1. Deducting Rent Payments in General
2. The Cost of Acquiring, Modifying, or Canceling a Lease
3. Improvements You Make to Leased Property
4. Rental of a Portion of Your Home for Business
5. Leasing a Car
6. Leveraged Leases

Renting or leasing realty or equipment gives you the use of the property without owning it. From a financial standpoint, it might make more sense to rent than to buy property and equipment because renting may require a smaller cash outlay than buying. Also, the business may not as yet have established sufficient credit to make large purchases but can still gain the use of the property or equipment through renting. If you pay rent to use office space, a store, or other property for your business, or you pay to lease business equipment, you generally can deduct your outlays.

Sale-leasebacks are discussed in Chapter 6.

Deducting Rent Payments in General

If you pay to use property for business that you do not own, the payments are rent. Leases may take various forms. For example, with a net lease, the tenant pays for the use of the space as well as costs associated with operating the property, such as taxes, property insurance, utilities, sewer and water, and trash collection. Regardless of the form of the lease, the payments are all considered rents (even if they may cover taxes). They may also be called lease payments. Rents paid for property used in a business are deductible business expenses. These include obligations you pay on behalf of your landlord. ...