Can I Deduct Commercial Rent From My Income?

Commercial rent is charged on properties that have been designated by local governments as business specific locations. As commercial property is separate from personal living districts in many municipalities, and it is a potential income tax deduction.

IRS Rent Definition

The IRS defines rent as "any amount you pay on property you do not own." The IRS allows deductions of rent if the property is used for your business or trade.

Rent Deduction Amount

If your commercial rental property is not used entirely for your business, then you are only allowed to a percentage of the rent based on the percentage of the property used by your business. For example, if 80 percent of the property is used for your primary business while 20 percent is sublet to another company, you are only entitled to claim 80 percent of your rent as a deduction.

Commercial Rent Deduction

Retain all documentation related to the amount of rent you paid in the business year as well as any other paperwork that verifies your use of the space. Claim the rental deduction on the tax form applicable to your business structure. For example, a sole proprietorship claims commercial or private rent as part of "Total other expenses" as reported on line 48 of the Schedule C form, Profit or Loss from Business.

References

• The Free Dictionary: Commerical Real Estate
• IRS: Business Expenses
• IRS: Schedule C