I have an LLC that is taxed as an SCORP.

I am currently running the business from my home. What I would like to do is have the business build an addition/building in my property to house its office etc.

How would one go about setting that up properly and not violate any tax laws?

Is it possible at all?

so,you are in the process of constructing a b/d for use by your S-Corp. you need to know how the property should be held by the S-Corp or in a separate personal account/structure. The S-corp and the property are two different assets with very different attributes. Consequently, you should have a plan that provides you with options and the flexibility so that you can make different decisions as your financial needs change. By maintaining your assets in separate entities provides you with that flexibility. You may want to dispose the S-Corp and the property at different times; To maintain separate sets of books for two separate businesses involves slightly more work, but not much. The combine profits and losses would be unaffected whether the property is held by the S-Corp or held in a separate entity. There are choices as to methods of tax accounting for the S-Corp and the property. The methods selected become important upon asset disposition. If you decide to hold the property outside of the S-Corp, you may want to consult with an appropriate attorney as how the asset should be held ,directly by you or in a separate entity (e.g. LLC taxed as s corp). You should certainly have the real property titled in the s corp to avoid any personal liability issues. It is a good idea to have the real property owned by a separate company from your existing company.Although the S Corp will still deduct the amount of rent paid on their coporate tax return 1120S, only home mortgage interest and the real estate taxes paid may be expensed against the rental income you would report on your Federal 1040 Sch E.
This means that you would not be able to deduct any % of utilities, repairs, depreciation, etc on the Sch E.This was done to stop employees from possibly routing monies that should be considered compensation and reclassifying them to rent. You may however, set up an accountable plan and have the S corp reimburse you for the portion of expenses that would have arisen from an office in the home situation.This is a complicated topic. Let me make sure I understand and can use this info. It also doesn't matter if the property is owned by an real estate LLC or personally or if the business renting the property is a corp. or sole proprietor. If you rent your property to the businesses you can deduct expenses, real estate losses and depreciation.. However, if your own business rents the property the rental income is subject to normal income taxes (no expenses, no depreciation/no real estate losses).your mortgage interest and property taxes are deductible. The only tax benefit of having your company rent your property is that the rent could pay the mortgage payments which would be the same as paying it with pre-tax dollars. If this house is in an LLC and rented to a business you should pay rent to the s corp .?
Since you perform a service for the S Corp, you are required to pay yourself on a W2, and that of course means that you must also pay all of the payroll taxes. if you own the company and you want to lease all or part of your home back to your company, IRS is wondering if you are possibly taking monies that should be considered "salary" and diverting them into "rent paid". THAT'S why this is confusing. In his case,You can set up an accountable plan between yourself and the S Corp, submit the worksheet found in Publication 587 . The S Corp still records the expenses on the Corporate tax form 1120S, but since this is now in the form of a reimbursement to you, there is no tax consequence to you.

The real issue here is that you are the sole owner of the S Corp, and IRS does not want your salary to be diverted into "rent paid".