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Small Business Rent Expenses May Be Tax Deductible

by IRS

Small Business Rent Expenses May Be Tax Deductible

Rent is any amount paid for the use of property that a small business doesn’t own. Typically, rent can be deducted as a business expense when the rent is for property the taxpayer uses for the business.

Here are some things small business owners should keep in mind when it comes to deducting rental expenses:

Lease or purchase

Unreasonable rent
Businesses can’t take a rental deduction for unreasonable rents paid. Rent is unreasonable for deduction when it is higher than market value or a professional appraisal.

Office in the home
A business owner’s workplace can be in their home if they have a home office that qualifies as their principal place of business.

Rent paid in advance
Rent paid for a business is usually deductible in the year it is paid.

Canceling a lease
A business can usually deduct the costs paid to cancel a business lease.