Can I rent a car from my own LLC business and write off vehicle expenses?

This is an area where you need to be really careful. The IRS looks closely at transactions between you and your LLC, especially when personal use is involved. If you buy a car through your LLC and use it primarily for personal purposes, you can't just write off all the vehicle expenses. The IRS will view this as trying to convert personal expenses into business deductions, which is a red flag. Instead, you'll need to track business vs. personal usage. Only the business portion can be deducted. If you're renting it to yourself, that income would be taxable to the LLC, but your personal payments aren't deductible as personal expenses. This effectively means you're paying with after-tax dollars. If your main goal is tax advantages, you might be disappointed. You'd be better off keeping personal vehicles separate from business assets unless you have significant legitimate business use.

I had a similar situation with my photography business last year. I discovered taxr.ai (https://taxr.ai) when I was trying to figure out the right way to handle business vs personal vehicle expenses. Their system analyzed my operating agreement and past tax returns, then gave me specific guidance on how to structure things properly. For me, they recommended keeping my vehicles separate - business vehicles stay 100% in the business, and personal vehicles stay personal, with proper mileage tracking for any business use. This has saved me so much headache with documentation and potential red flags with the IRS. They even provided templates for the mileage logs I need to keep.

Just wanted to follow up - I decided to try taxr.ai after reading about it here. I uploaded my LLC docs and description of my rental property situation (similar to the car rental business). They actually spotted a mistake in how my accountant had been handling vehicle deductions! They provided really specific guidance about the "ordinary and necessary" test for business expenses and how my situation would likely be viewed by the IRS. The documentation they provided helped me understand exactly what I can and can't deduct. Definitely saved me from making some mistakes that could have triggered an audit. Wish I'd known about this service last year!

If you're trying to contact the IRS to get an official answer on this type of tax situation, good luck with that! I tried calling them about a similar business expense question last month and spent HOURS on hold. Finally discovered Claimyr (https://claimyr.com) and watched their demo video (https://youtu.be/_kiP6q8DX5c) showing how they can get the IRS to call YOU instead. I was honestly shocked when it worked! I got a call back from an actual IRS agent within about 45 minutes, and they walked me through exactly how they view self-rental situations with LLCs. Getting that official clarification was huge for my peace of mind before I made any decisions about my business vehicle setup.

I have to eat my words about Claimyr. After my skeptical comment, I figured I'd test it myself since I actually did have a tax question I'd been putting off asking the IRS. The service did exactly what they claimed - got the IRS to call me back in about an hour. The agent I spoke with gave me detailed information about self-rentals between me and my S-Corp, which is similar to the LLC situation in this thread. Turns out there are strict rules about "self-rental" arrangements that I hadn't been aware of. The key is that any arrangement must reflect fair market value and have a legitimate business purpose beyond tax savings. Definitely worth getting clarification directly from the IRS!

One thing nobody's mentioned yet is insurance considerations. If you buy the car through your LLC but use it personally, make sure your insurance coverage is appropriate. Some commercial policies won't cover personal use, and some personal policies won't cover a business-owned vehicle. I learned this the hard way when I had a fender bender in my LLC-owned car and my insurance initially denied the claim because of how I had it titled vs. how it was insured. Ended up being a huge headache that cost me way more than any tax benefit would have been worth.

My tax guy told me there's a specific IRS rule about "self-rental" arrangements where rental income received is treated as non-passive even if rental activities are generally considered passive. Something about Section 469 and "self-rental rule"??? Anyone familiar with this?

This is a complex situation that requires careful consideration of multiple factors. As others have mentioned, the IRS scrutinizes self-rental arrangements closely, especially when personal use is involved. Here are the key issues to consider: 1. **Business Purpose Test**: The arrangement must have a legitimate business purpose beyond tax savings. Since you're primarily using it for personal transportation, this could be problematic. 2. **Fair Market Value**: Any rental payments must reflect what you'd pay an unrelated party for similar use. 3. **Documentation**: You'll need formal lease agreements, proper insurance coverage, and detailed mileage logs to support any business use claims. 4. **Passive Activity Rules**: As mentioned by others, the self-rental rules under Section 469 could affect how income and losses are treated. 5. **Liability Protection**: Mixing personal and business use without proper documentation could pierce your LLC's corporate veil. Given these complexities, you might want to consider simpler alternatives: - Keep personal vehicles separate and use standard mileage deduction for business trips - Purchase the vehicle personally and lease it TO your LLC if you have legitimate business use - Consult with a tax professional who specializes in small business taxation The potential audit risks and complexity may outweigh any tax benefits, especially if personal use exceeds business use significantly.

I went through this exact situation with my consulting LLC last year. The complexity and potential risks really aren't worth it for primarily personal use vehicles. What I ended up doing was keeping my personal car separate and just tracking business miles with a simple app on my phone. For legitimate business trips (client meetings, picking up supplies, etc.), I claim the standard mileage deduction. It's clean, simple, and audit-friendly. The "rent from my own LLC" approach creates so many potential issues - insurance complications, documentation requirements, passive activity rule complications, and the IRS red flags that everyone mentioned. Plus, if you're audited, you'll spend way more on accounting fees defending the arrangement than you'd ever save in taxes. One other consideration nobody mentioned: if your LLC already has 4 rental vehicles, adding a 5th that's primarily for your personal use could affect your business classification with the IRS. They might start questioning whether this is truly a rental business or just a way to write off personal expenses. My recommendation? Keep it simple. Buy your personal replacement car personally, track your actual business miles, and take the standard deduction. You'll sleep better at night and avoid potential audit headaches.