Home vs. Business Expenses and Tax Deductions for Landlords

Play it safe with the IRS and keep all personal, living and family expenses separate from your business expenses. This is especially important when it comes to home office expenses.

Since the IRS relaxed its guidelines for home office deductions several years ago, there has been a rise in fraudulent expense claims. The IRS noted that the following are not considered ordinary and necessary expenses to run a business and are therefore not deductible:

• Travel, meals and entertainment unless you are meeting a potential client, and not everyone is a potential client
  
  
• All automobile or truck expenses unless the vehicle is used exclusively for business travel
  
  
• Payments to family members for activities that benefit the home or family
  
  
• Excessive payments to family members for work performed (i.e., payments above the going rate for similar work by a professional)
  
  
• Utility expenses for the entire home (i.e., you cannot place business materials throughout your house in order to claim the entire house is your home office)
  
  
• Medical expenses for family members
  
  
• Education expenses for family members