The Tax Consequences of Renting

When you rent something that is used in your family child care business, you can deduct it using the rules described below:

House/Apartment – Deduct the Time-Space % of your monthly rent. You won’t be able to claim any mortgage interest or property tax (unless you are responsible for paying the property tax).

You also won’t be able to depreciate your home (because you don’t own it). You can deduct utilities, repairs, and home improvements you pay for.

Car – If you lease your car you can choose to claim car expenses by using either the standard mileage rate or the actual car expenses method. You won’t be able to claim any car loan interest (because you aren’t making car payments). I wrote an article earlier about why it doesn't make financial sense to lease a car.

Equipment – If you rent equipment used in your business (furniture, play equipment, party equipment, inflatable slides, tents, etc.) you can deduct 100% of the cost if it is only used during day care hours. If not, you can use your Time-Space %, or calculate an actual business use percentage.

Other – If can also deduct videos that you rent from Netflix or your local video store (are they still around?) and you can deduct the tools, etc. that you rent to fix your home.

Tom Copeland - www.tomcopelandblog.com

Image credit: https://depositphotos.com/36304937/stock-photo-home-for-rent-sign.html

For more information about how to deduct renting expenses, see my 2014 Family Child Care Tax Workbook and Organizer.