We’ve got three and a half months before the buzzer: December 31. Every dollar you spend between now and then should work double duty, lowering your taxes and building wealth. Don’t blow a dollar just to save thirty cents. The real play before year-end? Stop paying rent to your landlord and start paying it to yourself.
Why Self-Rental is So Powerful
If you’re a business owner paying rent to a landlord, you’re building their wealth, not yours. Buying your own space—a shed, storage unit, office condo, or even part of a larger building—turns that monthly rent check into equity.
A lot of owners think buying is out of reach. But most big buildings you see downtown are condominiumized. You don’t have to buy the whole tower. You can buy a slice. Commercial condos have exploded since COVID, and the cost is usually less than you’d expect.
Here’s the kicker: under the One Big Beautiful Bill, you can bonus depreciate the hell out of that building. You can’t write off the land, but you can write off the building and improvements. That means in the same year you buy, you could drive your taxable income way down, sometimes to zero.
What If You’re Stuck in a Lease?
I hear the excuse all the time. “Mark, I’m in a five-year lease. I can’t get out.” Wrong. If you terminate early, you’re only on the hook until your landlord finds a new tenant. And you can help them find one.
In fact, the tax savings from owning might be so good that even if you had to eat a few months of rent, you’d still come out ahead. Instead of lining someone else’s pocket, you’d be building equity in your own property, lowering your tax bill, and controlling your space.
How the Self-Rental Works
Here’s how to structure it. You set up a new LLC to own the building. Your operating company, usually your S corp, becomes the tenant. Because you have common ownership, the IRS allows you to treat the rent as business income in one entity and a deduction in the other under what’s called a “self-rental” rule.
The beauty is you can bonus depreciate 100% of the 5, 7, and 15-year property inside that building. Think furniture, fixtures, flooring, HVAC, and improvements. That depreciation flows against your operating income, sometimes wiping out the tax bill completely.
And don’t overlook SBA loans. The 504 program was designed for this exact scenario. The SBA loves to finance business owners already paying rent because they know the cash flow is there. This is how dentists, doctors, contractors, and realtors quietly build retirement.
What About Higher Mortgage Payments?
Some business owners worry that a mortgage payment will be higher than their rent. Maybe it is, but how much of that payment is principal? That’s money you’re essentially paying yourself. Rent is gone forever. Mortgage principal comes back as equity.
And with depreciation on your side, the tax savings often cover the difference. So even if the payment looks bigger on paper, the long-term wealth you’re building more than offsets it.
The Bottom Line
Don’t let the tax tail wag the dog. The self-rental strategy puts you in control, letting you bonus depreciate the building, slash your tax bill, and redirect what used to be rent into an asset you actually own. Talk to your advisor, talk to your realtor, and see what’s out there. You might be surprised at how doable it really is.
