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Most residential leases include various terms to the effect of prohibiting subleasing of the property.

If you're a member of a partnership and/or a corporation, and require office space in order to participate in business on behalf thereof, would it be legal to rent a part of your apartment to establish your office (e.g., to receive rental income and be eligible for deduction of rent-related expenses, jurisdiction of US of A), or would your residential rental agreement preclude the legality of doing so?

Assume that the rented space would essentially be a regular home office, would never involve physical business meetings with more than a couple of people a day (or even a week/month, e.g., not an in-and-out situation), and would not be a mail-related business.

If above is totally OK, would the situation be any different if you were to have an extra 11:00 to 19:00 employee on the premises?

  • When your agreement says "no subleases" it means no subleases. – Nij Dec 19 '16 at 20:26
  • @Nij I think, generally, lease agreements cannot prohibit you from having a home office (and/or simply don't do that in practice); here, the only result of the sublease is basically a paper trail for compliance, which would not result in any extra people occupying the premises – cnst Dec 19 '16 at 21:21
  • @Nij, can you kindly explain your downvote? This is a short and succinct legal question, which may as well have a very educating and non-obvious answer, once one comes along. – cnst Dec 19 '16 at 21:24
  • @cnst as voting is anonymous, you shouldn't jump to the conclusion that a particular person has voted one way or another. Further, comments are not (or not necessarily) for explaining votes. – Dale M Dec 19 '16 at 23:19
  • @Nij in at least one state, New York, a lease clause saying "no subleases" is invalid, because landlords may not "unreasonably" withhold their consent to a sublease. – phoog Dec 20 '16 at 16:02
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It isn't at all obvious to me why a true "sublease" which creates a legal property right in certain defined real estate in exchange for some amount of rent to the exclusion of occupancy by the primary tenant, would really be necessary in the situation that you describe.

One can grant someone permission to use your space, and even charge them money for doing so, without creating a property interest called a "sublease".

For example, when you go to a movie theater you pay money and are given the right to sit in a seat (in the fancy movie theaters these days, even an assigned seat) for a particular period of time, but you have not subleased that assigned seat from the movie theater. Instead, you have a "license" to use that seat and are either a licensee (or more likely an invitee) of the movie theater.

Assume that the rented space would essentially be a regular home office, would never involve physical business meetings with more than a couple of people a day (or even a week/month, e.g., not an in-and-out situation), and would not be a mail-related business.

If above is totally OK, would the situation be any different if you were to have an extra 11:00 to 19:00 employee on the premises?

Normally a residential lease will contain provisions stating what uses of the leased property are allowed and what uses are not permitted which would have to be interpreted on a case by case basis. If there is not stated list of permitted uses, generally "any lawful use" of the property given its current zoning classification would be permitted.

Most residential leases and most zoning statutes in places zoned residential would not prohibit the use of a premises as a home office used only by the resident and an occasional visitor (assuming that the business activity was not itself illegal like drug dealing, money laundering, loan sharking, prostitution or pimping, etc.). But, it wouldn't be unheard of to see a residential lease or a zoning ordinance that did prohibit home office uses.

An eight hour of day employee on the premises starts to look like a commercial office use, which many residential leases and many zoning statutes in places zoned residential (that would apply in the absence of a more expressly stated lease prohibition) would prohibit. But, again, only the particular lease in question and the particular zoning ordinance applicable to that particular location would matter. If the lease said, "any lawful use" was permitted and the property was zoned for either commercial or residential use, hiring an employee to be on the premises wouldn't violate either, even though a true "sublease" might still be prohibited.

  • It's also worth noting that state law can impose requirements on the landlord to allow certain uses of the property regardless of what the lease says. – phoog Dec 20 '16 at 16:00
  • It can, although that kind of legislation is more common with limits on what condo associations can do than it is in the rental context. – ohwilleke Dec 20 '16 at 17:52
  • Perhaps my question wasn't very clear. The question is specifically about deductions: personal and business deductions. I'm not sure what sort of structure you propose, but you don't seem to address whether both deductions can still proliferate with it. I'll clarify the question.. – cnst Dec 20 '16 at 18:22
  • @ohwilleke, leagle.com/decision/19858584atc1_185/… – cnst Dec 20 '16 at 18:29
  • Ah. Didn't notice the tax tag. So the notion is to get out of 280A with the rental exception. If that is the motive, I'd suggest going to the landlord and offering to pay $50 a month extra for a sublease for tax purposes only with cross-guarantees which puts one more entity on the hook for rent. – ohwilleke Dec 20 '16 at 18:42

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