Leasing Assets to
Your Corporation
A Simple Strategy May Save Some Tax Dollars
A business does not have to own all of its operating
assets. Leasing your personally owned property, such as a building,
vehicle, or equipment to your incorporated business may provide a tax
savings. Similarly, another corporation, a partnership, or a family
business in which you have an ownership interest may lease assets to your
business.
You may not want your corporation to own a lot of
assets if you are in a business where lawsuits are common. Leasing instead
of owning is one way to insulate assets from potential creditors.
To avoid problems with the IRS, lease terms between you and your
corporation must be fair to both sides. The contract should be legally
binding and the payments should be set at the same rate you would charge
anyone else. Lease payments are deductible expenses to your corporation.
While lease income is taxable to you, you in turn can deduct the costs of
ownership, including mortgage interest, maintenance, real estate taxes,
repairs, and depreciation.
