Can a self-employed doctor deduct rent paid to themselves on Schedule C?

So what if she created an LLC that owned the building, and then her medical practice (still Schedule C) paid rent to the LLC? Would that work or is that still considered paying yourself?

That's a great question! Creating a separate legal entity that owns the property could work. If she formed an LLC to own the building, and that LLC is treated as a separate entity for tax purposes, then her medical practice could potentially pay rent to the LLC. This strategy is called a "dual entity" arrangement and it's fairly common. However, there are important details to get right. The LLC should be set up properly with legitimate business purpose, the rent amount must be reasonable (comparable to market rates), and there needs to be proper documentation (formal lease agreement). Also, the tax implications depend on how the LLC is classified for tax purposes - it could be a disregarded entity, partnership, or S-corporation.

Did it give you any actual tax forms or just advice? I'm trying to figure out if I need to create this whole separate business entity thing for my rental property that my consulting business uses.

I'm kinda skeptical about AI tax tools. How does it know all the complex IRS rules? Did it really give you accurate info or just generic advice you could get anywhere?

It actually gave me fillable PDF templates for the forms I needed, along with instructions specific to my situation. For the business entity creation, it provided a complete checklist of steps and documents required by my state, which was super helpful. The AI seems to be trained on actual tax code and IRS publications. What impressed me was that it referenced specific tax court cases related to self-rentals and explained how they apply to different situations. It wasn't generic advice at all - it asked detailed questions about my specific circumstances and gave tailored recommendations based on my answers.

Wait how does this actually work? Do they have some special connection to the IRS or something? Seems kinda sketchy that they can bypass the hold times when nobody else can...

Yeah right. Nothing gets you through to the IRS faster. I'll believe it when I see it. They probably just call and wait on hold for you and charge a fortune for the "service" lol.

They use a technology that navigates the IRS phone tree and waits on hold for you, then calls you when an actual agent picks up. It's totally legitimate - they don't have special access, they've just figured out how to make the existing system work better. They're super transparent about the process. They just automate the frustrating part (the waiting) so you don't have to sit there listening to the hold music for hours. The IRS agents I spoke with had no idea I'd used a service to get through - to them it was just a normal call.

Thanks for laying out the options! Do you know roughly how much more complicated her tax situation would get if she went with the separate LLC option? She does her own taxes now but is worried about making it too complex.

The separate LLC option definitely adds some complexity. She'd need to file a separate tax return for the LLC (either Form 1065 if treated as a partnership or Form 8825 with her personal return if it's a single-member LLC reported on Schedule E). She'd also need to maintain separate books and records for the property business, create a formal lease agreement between the entities, and ensure all transactions between her medical practice and the property LLC are properly documented and at fair market value. It's usually at this point that most small business owners decide to work with a tax professional, at least for the first year or two until they understand all the requirements. The tax savings can be substantial (potentially allowing retirement plan contributions from both entities, possible QBI deduction benefits, and avoiding self-employment tax on the rental income), but the compliance burden does increase.

You're absolutely right - the entity structure makes a huge difference here! If her medical practice is an S-corporation rather than a sole proprietorship, then she has more options. With an S-corp, the corporation is a separate legal entity from the individual, so the building could be owned personally while the business pays rent to her as an individual. That rent would be a deductible business expense for the S-corp and would be reported as rental income on Schedule E (not subject to self-employment tax). This arrangement is much cleaner from a tax perspective compared to the dual-entity approach needed for a sole proprietorship. It's also why many successful medical professionals eventually convert from Schedule C to S-corporation status as their practices grow.

Thanks for confirming! My accountant recommended I switch to an S-corp once my business income hit a certain level, and the ability to separate my business property was one of the big reasons. Saved me a ton on self-employment taxes too.

This is really helpful info about the timing considerations! I hadn't thought about the potential issues with transferring property to an LLC after already using it for business. Do you know if there are any safe harbor provisions or ways to minimize the tax hit when making that kind of transition? My sister definitely wants to avoid accidentally triggering a big tax bill while trying to save on taxes.