How to Buy Your Own Office and Rent It to Yourself!

There are three and a half months left in the year to create tax write-offs for 2025. The speaker emphasizes making smart financial decisions rather than throwing away money for a write-off, especially with a 30% tax rate, where spending $100 only yields a $30 benefit. A key strategy highlighted for business owners is to purchase their own commercial space instead of paying rent to others. This can be achieved by buying a portion of a condominiumized building, a commercial condo, which is presented as a significant opportunity.

The concept of "self-rental" is central to this strategy. By acquiring a building and renting it to one's own business (an S-corp) through a new LLC with common ownership, business owners can take advantage of bonus depreciation of 100% on the building (not the land). This can lead to significant tax savings, potentially even zero tax for the year. This approach offers a way to build equity in one's own property rather than paying rent to a landlord, and it is facilitated by loans like the SBA 504, which are designed to help business owners buy their own spaces.

Even if the mortgage payment for a purchased building exceeds current rent, a portion of that payment goes towards principal, which is essentially building equity. This strategy, referred to as a "hottest real estate strategy" for business owners, allows them to gain tax benefits and financial advantages without needing specific real estate professional status or material participation like other rental loopholes.

• There are 3.5 months left to create tax write-offs for the current year.
• Business owners paying rent should consider buying their own space, such as a commercial condo.
• The strategy involves setting up an LLC to buy a building and rent it to your S-corp, enabling 100% bonus depreciation on the building.
• SBA 504 loans are available and beneficial for business owners looking to purchase their own property.
• Purchasing a building allows for equity building through mortgage principal payments, even if the monthly payment is higher than current rent.

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Creating Tax Write-Offs [0:00]

• There are 3.5 months remaining to establish tax write-offs for the current year.
• Avoid spending money solely to get a write-off, especially when the tax rate is not 100%. Spending $100 for a $30 benefit at a 30% tax rate is not advisable.
• The goal is to make sound financial decisions by December 31st that provide significant tax write-offs.
• Do not let tax considerations dictate financial decisions.

"I want to make great financial decisions between now and 1231 that give me an excellent tax write off or the best I can find. So, I want to not let the tax tail wag the dog."

This section emphasizes the limited time remaining in the year for tax planning and the importance of making strategic financial moves that provide genuine tax benefits without unnecessary expenditure.

The Self-Rental Strategy: Buying Your Own Space [0:46]

• A key strategy for business owners paying rent to others is to purchase their own commercial space, such as a shed, storage unit, or building.
• Many business owners underestimate the feasibility and cost of owning their space.
• Commercial condos offer a way to own a "slice of a building," making ownership more accessible.
• The strategy is termed "self-rental," where a business owner buys a building and rents it to their own business.

"I want you to buy your own space, buy your own shed, buy your own storage unit, buy your own building."

This part introduces the core strategy of business owners acquiring their own physical space as a means to reduce expenses and gain financial advantages.

Terminating Leases and Building Equity [1:45]

• If currently in a lease, terminating it might be possible without being liable for the full term, especially if a new tenant is found.
• The savings from tax and financial benefits of owning a property might even allow for paying off the remaining lease term.
• Instead of paying rent to someone else, the business owner builds equity in their own building.
• The mortgage payment can potentially be less than current rent, or at least a portion of it builds equity.

"Instead of paying rent to someone else, I'm now building equity in my own building, maybe paying less in rent to myself."

This section addresses the practicalities of exiting existing leases and highlights the benefit of transitioning from paying rent to building personal equity in a property.

The "Self-Rental" Mechanics and Bonus Depreciation [2:19]

• The strategy, called "self-rental," involves acquiring a building within the next 3.5 months.
• Purchase the building through a new LLC and rent it to your S-corp under a Section 4 election if there is common ownership.
• Common ownership applies if you and/or your spouse own 100% of both the LLC and the S-corp.
• With common ownership, you can bonus depreciate 100% of the three, five, seven, and fifteen-year property (not the land).

"So, the strategy is called self-rental. And I what I want to do is go out and acquire a building in the next three and a half months and buy this building in a new LLC and rent it to my escop under a -4 election under the IRS if I have common ownership."

This segment details the specific financial and legal structure required for the self-rental strategy, focusing on depreciation benefits available under IRS rules.

Leveraging SBA Loans for Property Acquisition [3:22]

• Banks and the SBA 504 loans are highly beneficial for business owners looking to buy their own space.
• The SBA is eager to lend to businesses that are already paying rent, recognizing their existing cash flow.
• The SBA offers specific loan packages to assist business owners in purchasing their own buildings.
• This is how many professionals, like contractors, realtors, dentists, and doctors, build their retirement by owning their properties.

"So, I can now go down to the bank and the SBA 504 loans, amazing because the SBA wants to loan a business owner that is already paying rent to someone else because they see the cash flow supporting the building that they're going to rent to."

This part highlights the accessibility of financing for business owners looking to purchase property, particularly through SBA programs designed for this purpose.

Financial Considerations: Mortgage vs. Rent and Equity Building [4:14]

• The mortgage payment for a purchased building might be higher than the current rent.
• However, a significant portion of the mortgage payment is principal, which builds equity for the owner.
• This strategy is considered one of the hottest real estate strategies for business owners this year.
• Consult with advisors and realtors to explore available options.

"Because you're going to get that principal back. So that's called the dash for one of the most hottest real estate strategies this year with the one big beautiful bill and for business owners."

This concluding segment addresses the financial aspect of purchasing a building, emphasizing that while payments might seem higher, they contribute to valuable equity.