Is Business Rent Tax Deductible?

Is business rent tax deductible?

Yes. Business rent is tax deductible when it’s an ordinary, necessary, and reasonable cost of carrying on your trade or business. IRC section 162(a)(3) allows the deduction for rentals or other payments required as a condition to the continued use or possession of property you don’t own and have no equity in.

That covers commercial office and warehouse rent, retail space, coworking memberships, equipment leases, and the business-use share of rent on a qualifying home office. Indinero’s tax team sees the same failure points every filing season, and almost all of them start in the books rather than on the return.

Two limits are built into that one sentence of the statute, and both are where deductions get lost.

• No title, no equity. If any part of what you’re calling rent buys you an ownership interest, that part isn’t rent. It’s a purchase, recovered through depreciation.
• Ordinary, necessary, and reasonable. There’s no cap on business rent and no phase-out. The constraint is business purpose and amount. The IRS states in Small business rent expenses may be tax deductible that a business can’t deduct unreasonable rent, and that the question generally only surfaces between related parties.

Equity kills the rent deduction.

Mixed-use property is split, not disqualified. Only the business share comes off, which is what makes home office allocation work and what kills a deduction taken on a full apartment lease.

What changed for 2026

• Employees still can’t deduct a home office, and that repeal is now permanent rather than scheduled to expire.
• The Form 1099-MISC reporting threshold for rents rose to $2,000 for calendar year 2026, up from $600 for 2025.
• One hundred percent bonus depreciation under section 168(k) is available for qualified property acquired after January 19, 2025, which matters for tenant buildouts.
• For tax years beginning in 2026, the section 179 dollar limitation is $2,560,000 with a $4,090,000 reduction threshold, per the IRS inflation adjustments for tax year 2026.

One housekeeping note that says more about a source than the source intends. The IRS retired Publication 535 after tax year 2022 and confirms it’s no longer being revised. Rent guidance now lives in Publication 334, Tax Guide for Small Business. If an article dated this year still sends you to Pub 535 for rent, nobody rechecked it.

This page sits inside our broader guide to business tax deductions, and our list of deductible business expenses covers what sits next to rent.

How to Write Off Rent as a Business Expense

The hard part isn’t the deduction. It’s the eligibility rules and the limit attached to each one. Most businesses deduct rent in one of three places: a home office, traditional office or coworking space, and lodging while traveling. The first two are below. Travel gets its own section.

The Home Office Deduction

IRC section 280A starts from disallowance, then carves out three independent ways to qualify. The space has to be used exclusively and regularly, and it has to be one of the following:

• Your principal place of business
• A place where you meet patients, clients, or customers in the normal course of business
• A separate structure not attached to the dwelling unit, used in connection with the trade or business

Exclusive use is literal. Publication 587 states that combined personal and business use of the same area disqualifies it.

W-2 employees are out, and the precise version of that rule matters. The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions subject to the 2 percent floor under IRC section 67(g) beginning with tax year 2018. The One Big Beautiful Bill Act, H.R. 1 of the 119th Congress, enacted July 4, 2025, made that termination permanent, which the IRS confirms in its material on the individual provisions. For tax year 2026, a remote employee paying rent and working from the kitchen table deducts nothing, regardless of employer policy. The only relief is an employer reimbursement under an accountable plan.

One ceiling applies under either method. Section 280A(c)(5) caps the deduction at gross income from the business use of the home, reduced by expenses deductible anyway and by business expenses not attributable to the home. Our home office deduction guide walks the arithmetic.

Real Expense Method

Pub 587 treats a renter’s rent as an indirect expense, so you don’t deduct rent directly. You compute a business-use percentage first, either business square footage divided by total home square footage or a room-count method where rooms are roughly equal, then apply that percentage to total annual rent.

Utilities, renter’s insurance, and general repairs follow the same allocation. A repair made only to the office space is a direct expense and comes off in full. Actual expenses go on Form 8829, Expenses for Business Use of Your Home, which attaches to Schedule C. Amounts disallowed by the gross income limitation carry forward under this method.

Simplified Method

The simplified method trades dollars for time. The IRS simplified option, last reviewed February 3, 2026, allows $5 per square foot of home used for business, capped at 300 square feet. Maximum deduction for tax year 2026 is $1,500. The rate came from Revenue Procedure 2013-13 and hasn’t been adjusted since.

Three tradeoffs are worth knowing before you elect it. There’s no depreciation deduction, which also means no recapture when you sell. There’s no carryforward of disallowed amounts. And the election is made on a timely filed original return and can’t be changed for that same year, though you can switch methods between years.

Who Can Claim It, by Entity Type

Entity structure changes the home office answer more than it changes anything else here, and most coverage skips it.

• Sole proprietor and single-member LLC. Schedule C plus Form 8829, or the simplified method reported directly on Schedule C.
• S corporation shareholder-employee. Form 8829 isn’t available, because it attaches to Schedule C, and the employee deduction is permanently gone. The working route is an accountable plan. The corporation reimburses the allocated business share of rent, utilities, and internet under a written plan meeting the business connection, substantiation, and return-of-excess requirements of Treas. Reg. section 1.62-2. The company deducts it. The owner excludes it from income.
• Partner in a partnership or multi-member LLC. A different mechanism, covered below.

Renting your home to your own corporation doesn’t work the way it’s pitched. Section 280A(c)(6) denies the owner-employee any home office deduction against rent received from an employer they perform services for. You report the rent on Schedule E with nothing to offset it. Our guide to tax deductions for self-employed businesses covers the adjacent items.

Traditional Office Space

A commercial lease used entirely for business generates a 100 percent deduction on base rent. The complications sit in everything else the lease makes you pay.

Deductible as a current operating expense: base rent for the year it covers, common area maintenance charges, the tax and insurance and maintenance components of a triple net lease, utilities and janitorial and security billed through the lease, and repairs that keep the space in ordinarily efficient operating condition. All of it is rent under section 162(a)(3), because all of it is required for continued use. Costs paid to cancel a business lease are generally deductible too.

Two categories aren’t current deductions, and that split trips up more tenants than any other rule here. Lease acquisition costs get amortized. 26 CFR 1.162-11(a) directs a lessee who acquires a leasehold for a specified sum to deduct an aliquot part each year over the term, which sweeps in key money, lease assignment payments, and tenant-paid broker fees, with renewal options folded in under IRC section 178 where the facts require it. Tenant improvements get capitalized and depreciated, covered in the tactics below.

Rent Must Be Reasonable

Reasonable has a working definition. The IRS benchmark is what you’d pay a stranger for the use of the same property, and rent isn’t unreasonable merely because it’s computed as a percentage of gross sales. In practice the question only comes up between related parties, such as two LLCs owned by the same person or a building held in a family member’s entity.

Three rules stack there. Most coverage stops after the first.

• Reasonableness. Defend it with a broker opinion of value, a market survey, or an appraisal dated when the lease was signed. Not a memo written after the notice arrives.
• Timing under section 267. IRC section 267(a)(2) defers an accrual-basis payer’s deduction on amounts owed to a related cash-basis payee until the payee includes it in income. Accrue December rent to your own landlord entity, pay it in March, and you have a March deduction.
• Self-rental recharacterization. Treas. Reg. section 1.469-2(f)(6) treats net rental income from property rented to a business you materially participate in as nonpassive, so it can’t absorb passive losses. A net loss from that same rental stays passive and suspended. See Publication 925. A grouping election under Treas. Reg. section 1.469-4 can help where the facts support it.

No Rent-to-Own Arrangements

Payments under a conditional sales contract aren’t deductible as rent. Classification turns on the intent of the parties as shown by their agreement and the facts when it was signed, and no single test always controls. The IRS lists the tells in its income and expenses FAQ, last reviewed September 5, 2026. You’re probably looking at a purchase if:

• Part of each payment is designated toward an equity interest you’ll receive
• You take title after a stated number of required “rental” payments
• What you pay over a short period is an inordinately large part of the total needed to obtain title
• Payments substantially exceed current fair rental value
• There’s an option to buy at a nominal price, or for a small amount relative to total payments
• Some part of the payments is designated as, or readily recognizable as, interest

The consequence isn’t a lost deduction. It’s a different one. You’re the owner, and you recover cost through depreciation. This pattern shows up constantly in equipment financing papered as a lease.

Special Rules for Partnerships and Multimember LLCs

The common shorthand, that each member deducts a proportionate share, isn’t how this works. A partnership or multi-member LLC deducts the rent it pays at the entity level on Form 1065. The effect flows through on Schedule K-1 according to the allocation in the partnership agreement, not automatically by ownership percentage.

Where a partner personally pays a partnership expense, including a home office, the deduction goes on Schedule E, page 2, as an unreimbursed partnership expense. One condition governs it. The partnership agreement or established practice has to require the partner to bear that cost without reimbursement. If the partnership would have reimbursed and the partner never submitted it, the deduction is gone. The fix is a written reimbursement policy in the operating agreement, drafted before the year starts.

Can You Write Off a Coworking Space?

Yes. A monthly desk or private office membership is a payment required for the continued use of space you have no equity in, which makes it section 162(a)(3) rent. There’s no separate coworking rule to learn, and bundled amenities included in a single membership fee ride along in the same deduction. Day passes, dedicated desks, and a rented studio all work the same way.

Two caveats. A W-2 employee who pays for a coworking desk personally still deducts nothing. And if you work primarily from a coworking space, you’re unlikely to satisfy the principal place of business test at home.

One or the Other: Traditional Office or Home Office

The absolute version of this rule is too strong. If you maintain an outside office where substantial administrative and management activities happen, your home generally fails the principal place of business test in section 280A(c)(1)(A). But that’s one of three qualifying tests, not the only one.

Section 280A(c)(1)(B) allows a deduction for space used exclusively and regularly to meet patients, clients, or customers. Section 280A(c)(1)(C) allows a deduction for a separate structure not attached to the dwelling, and by its terms that structure doesn’t have to be your principal place of business. A converted detached garage can qualify on the right facts even with a leased office downtown.

Timing splits cleanly either way. Work from home for six months and rent an office for the other six, and you take home office expenses within IRS limits for the first period plus office rent for the second.

Rules for Rent Paid Upfront

The general rule holds. You deduct only the amount that applies to your use of the property during the tax year and spread the rest over the period it covers. Prepay a five-year lease and you get five years of deductions, not one.

The exception most coverage misses is the 12-month rule. Treas. Reg. section 1.263(a)-4(f) doesn’t require capitalization of an amount paid for a right or benefit that doesn’t extend beyond the earlier of 12 months after you first realize it, or the end of the tax year following the year of payment. Both prongs have to be satisfied.

Two constraints keep this from becoming a general prepayment strategy. The rule doesn’t override the economic performance requirement of section 461(h) for accrual-method taxpayers, and a related-party landlord pulls you back into section 267(a)(2).

Travel Accommodations

A hotel or Airbnb booked for a business trip is rent in everything but name, and it’s deductible under a different paragraph of the same statute. IRC section 162(a)(2) allows a deduction for traveling expenses, including lodging, while away from home in the pursuit of a trade or business, as long as the amounts aren’t lavish or extravagant.

Three conditions have to hold.

• You’re away from your tax home. IRS Topic no. 511 defines your tax home as the entire city or general area of your main place of business, regardless of where you keep your family home.
• The trip requires sleep or rest. Your duties have to keep you away substantially longer than an ordinary day’s work. A day trip with no overnight stay produces no lodging deduction.
• The stay is temporary, not indefinite. This one is statutory. The flush language following section 162(a)(3) says a taxpayer isn’t treated as temporarily away from home during any period of employment exceeding one year. An assignment realistically expected to run longer moves your tax home, and the lodging becomes personal.

Airbnb gets no special rule. A short-term rental used for qualifying business travel is lodging on the same terms as a hotel, with the same limits and the same paperwork.

Substantiation is stricter here than for office rent. Section 274(d) requires documentary evidence and allows no deduction resting on your own uncorroborated statement. Publication 463 names the four elements: amount, time, place, and business purpose.

Per diem is the shortcut, with a catch general-interest coverage usually misses. Rev. Proc. 2019-48 governs the method, and Notice 2025-54 sets high-low rates of $319 per day for high-cost localities and $225 for other localities within the continental United States, for allowances paid on or after October 1, 2025. But the lodging-inclusive per diem belongs to a payer reimbursing an employee. A self-employed person may use a per diem for meals and incidental expenses only, and has to substantiate actual lodging cost with receipts. As a policy benchmark, the GSA FY 2026 rates hold the standard lodging rate at $110 per night and the standard meals and incidental rate at $68 through September 30, 2026.

Our guide to deducting travel expenses covers the categories beyond lodging.

Deductible vs. Nondeductible Rent

Sometimes it’s easier to know what’s allowed by knowing what isn’t. We’ve covered nondeductible business expenses broadly. On rent specifically, four things get disallowed.

• Personal rent. There’s no federal deduction for rent on your residence, in any state. A handful of states offer renter’s credits on the state return, which is a separate question from a federal business deduction.
• Non-business use of mixed property. Only the business share is deductible. For a home office, the section 280A exclusive-use test fails all at once rather than proportionally, so a room used for an office and personal storage produces zero, not a partial deduction.
• Unreasonable rent. Anything above market rate for the same property isn’t deductible, which is the rule that keeps a related-party lease from becoming an income-shifting device.
• Payments under a conditional sales contract. Not rent at all. You recover cost through depreciation instead, per the lease-versus-purchase analysis in the IRS fact sheet Deducting Rent and Lease Expenses.

One more item isn’t a disallowance so much as a timing problem. Lease acquisition costs and tenant improvements are real deductions, just not this year’s. Coding either one to rent expense overstates the current-year deduction and understates the depreciation schedule, and a mismatch in that direction is exactly the pattern an examiner notices.

Staying clear of these four is most of what protects you during an audit.

Documenting Rental Expenses

Strong records aren’t an audit ritual. They’re the deduction.

IRC section 6001 requires you to keep records sufficient to establish the amounts you report, and Publication 583 lists what qualifies: canceled checks, cash register tapes, account statements, credit card sales slips, invoices, and petty cash slips. An account statement can substitute for a canceled check when it shows the amount, the payee, and the transaction date.

Pub 583 also says something most bookkeeping advice frames as a preference. Open a business checking account and keep it separate from your personal account. That’s IRS guidance, not a style choice, and commingling funds is where rent deductions quietly die. Rent charged to a personal card has no clean trail, a home office percentage becomes an assertion instead of a calculation, and a related-party lease starts to look like a distribution.

What an examiner actually asks for

1. The fully executed lease or membership agreement, including amendments, so the term, rent schedule, escalations, and any purchase option are visible.
2. Proof of payment tied to that lease. Bank statements or canceled checks matching the ledger, not a general ledger printout.
3. For related-party rent, evidence of market rate at the time the lease was signed.
4. For a home office, a floor plan or measurement supporting the square footage, plus evidence of exclusive use.
5. For lodging, the section 274(d) elements of amount, time, place, and business purpose.
6. The capitalization schedule for tenant improvements, showing the placed-in-service date, recovery period, and any bonus or section 179 election.

The 1099 question. The Instructions for Forms 1099-MISC and 1099-NEC set the Box 1 rents reporting threshold at $2,000 or more for calendar year 2026, up from $600 for 2025. Two exceptions matter. Rent paid to a real estate agent or property manager is reported by that agent, not by you, and payments to corporations are generally exempt. A commercial landlord often needs no 1099 while a related-party lease to a member-managed LLC frequently does. Missing that filing doesn’t disallow the deduction by itself, but it hands an examiner a reason to look harder. The IRS makes the same substantiation point in its rental recordkeeping guidance.

None of this gets created in April. The lease terms, the improvement classification, and the home office allocation are all booked during the year, which is the practical argument for having one team do your bookkeeping and your tax work. Indinero bundles bookkeeping, accounting, tax, and fractional CFO advisory under one monthly engagement for that reason. Our online bookkeeping services handle the coding as it happens, and our tax compliance checklist covers the filings around it.

Maximize Your Business Rent Deductions: Tips and Strategies

Rent is usually one of the largest line items on a growing company’s P&L, and the tax outcome depends as much on how the lease and the buildout are papered as on the rent itself. These seven moves hold up under examination. Each turns on a specific rule, so the mechanics matter more than the idea.

1. Negotiate Tenant Improvements

Improvements you pay for on leased real property generally aren’t rent, and treating them that way is the most common error in this topic. 26 CFR 1.162-11(b) sends the lessee to cost recovery instead. Interior improvements to nonresidential real property placed in service after the building was first placed in service usually meet the definition of qualified improvement property in IRC section 168(e)(6), recovered over 15 years straight line. Enlargements, elevators and escalators, and the internal structural framework are carved out.

From there you have two accelerators. One hundred percent bonus depreciation under section 168(k) applies to qualified property acquired after January 19, 2025, with interim guidance in Notice 2026-11. Or you elect section 179 expensing, since section 179(e) treats qualified improvement property as qualified real property, along with roofs, heating and air-conditioning property, fire protection systems, and security systems. For tax years beginning in 2026 the limitation is $2,560,000 with a $4,090,000 reduction threshold under Rev. Proc. 2025-32, and section 179(b)(3) caps it at taxable income.

A landlord-funded allowance does something different. A cash construction allowance is ordinarily income to the tenant, with a narrow exclusion in IRC section 110 that requires retail space and a lease of 15 years or less. So the real negotiation is who builds and who owns. If the landlord builds and holds the improvement, you just pay rent.

2. Sublease Unused Space

Subleasing extra space reduces net occupancy cost without reducing your deduction. Sublease income is gross income to you, and rent on the master lease stays fully deductible under section 162(a)(3), because you’re still required to pay it as a condition of continued possession. It’s a revenue offset, not a bigger deduction.

Two cautions before you list the space. Check that the master lease permits a sublease, since an unauthorized one can trigger a default. And if you sublease space you’d treated as a home office, you’ve broken the exclusive-use test for that area. Subleasing to a related party pulls you into the reasonableness and self-rental rules above.

3. Explore Sale-Leaseback Arrangements

A sale-leaseback converts nondeductible mortgage principal into deductible rent and frees the equity tied up in a building. It also carries recharacterization risk, which makes it a specialist transaction rather than a tactic.

If the deal lacks economic substance and the buyer-lessor never takes on genuine attributes of ownership, the IRS can treat the whole thing as a financing. Rent becomes nondeductible principal plus deductible interest. The framework comes from Frank Lyon Co. v. United States, 435 U.S. 561 (1978), where the Supreme Court respected a sale-leaseback because the lessor bore real economic risk. Test the same factors before signing. Are price and rent at market, does the buyer bear the risk of underperformance, is there a bargain repurchase option, and is there a business purpose independent of the tax result.

4. Time Your Rent Payments Strategically

This one is real but narrower than it’s usually described. A cash-method taxpayer who pays January rent in December picks up an extra month of deduction, and that works because of the 12-month rule in Treas. Reg. section 1.263(a)-4(f), not because prepaying is inherently allowed.

Both prongs of that rule have to be met, so a December payment covering the next calendar year usually qualifies and a multi-year prepayment never does. Accrual-method taxpayers face the economic performance rules of section 461(h), and a related-party landlord triggers the section 267(a)(2) matching deferral. The honest version is one year, cash method, unrelated landlord, and the money actually leaves the bank before December 31.

5. Review Your Lease for Hidden Rental Expenses

In a triple net lease, you pay property taxes, insurance, and maintenance on top of base rent. Those pass-throughs are deductible as part of the cost of continued occupancy, the same as base rent. In a modified gross or full-service lease, the same costs are baked into base rent and already captured.

The gap here is operational, not legal. Common area maintenance reconciliations, real estate tax escalations, after-hours HVAC charges, and percentage rent true-ups arrive as separate invoices, get coded to a miscellaneous account, and never reach the occupancy analysis. They’re deductible either way. They’re just invisible to management reporting, which means nobody catches an overbilling.

6. Consider Co-working or Flexible Office Options

Coworking and flex space are deductible as rent under section 162(a)(3), and the shorter term suits a company testing a new market or a team that hasn’t settled its headcount. Utilities, internet, and shared amenities are usually bundled into one membership fee, which makes the expense easier to code correctly than a lease with a dozen pass-throughs.

The planning angle isn’t the deduction. It’s the interaction with your home office. A member who works primarily from a coworking space and only occasionally from home is unlikely to satisfy the principal place of business test at home, so claiming both usually doesn’t hold.

7. Track Personal Use Meticulously

Only the business share is deductible, and the shape of the allocation depends on the asset. For a home office it’s a business-use percentage backed by a measurement. For a leased vehicle or equipment it’s a mileage or usage log. For a space used partly for personal storage, section 280A exclusive use fails entirely rather than proportionally, which is the point most coverage gets backward.

There’s an upside to that discipline worth naming. A qualifying home office makes your home the principal place of business, which turns otherwise nondeductible commuting mileage between home and a work location into deductible business mileage. That’s frequently worth more than the home office deduction itself. Our guide to Section 179 and vehicle tax savings covers the vehicle side, and our roundup of small business tax deductions covers what else the log supports.

Conclusion

Business rent is deductible. Where the deduction actually gets lost is in the gap between the books and the return.

Three categories carry most of it. A qualifying home office under section 280A, traditional office and coworking rent under section 162(a)(3), and lodging while away from your tax home under section 162(a)(2). The rules for all three are public and knowable, and none of them is the hard part.

The hard part is ordering. The buildout that should have been capitalized as qualified improvement property and instead got coded to repairs isn’t a tax problem in April. It’s a bookkeeping decision made in June. December rent accrued to your own landlord entity and paid in March isn’t a filing error either. It’s a payment date. By the time the return is prepared, the deduction is either supported or it isn’t, and no amount of tax expertise recovers a record nobody created.

That’s the argument for one team instead of two. Indinero has maintained continuous operations since 2009 and serves 500+ regular customers across sole proprietor, LLC, S-corp, C-corp, and partnership structures, which is the full range this question spans. Bookkeeping, accounting, tax, and fractional CFO advisory sit under one monthly engagement, so the lease, the improvement, and the allocation get recorded the way the return will need them.

If rent is one of your largest expenses, it deserves better than a March reconstruction. Take a look at our business tax services and accounting services. Reach out for a free consultation. We’d love to learn about your business and find where we can help.

Frequently asked questions

These are the questions business owners ask most often about deducting rent. Each answer points back to the statute or IRS guidance that controls it.

Can an LLC deduct rent?

Yes, an LLC deducts business rent under IRC section 162(a)(3), though where the deduction lands depends on how the LLC is taxed. A single-member LLC reports rent on Schedule C, while a multi-member LLC deducts it on Form 1065 and passes the effect to members on Schedule K-1 by the operating agreement’s allocation. Indinero handles the bookkeeping and the return together for LLC, S-corp, C-corp, partnership, and sole proprietor structures under one monthly engagement.

Can I deduct rent if I work from home as a W-2 employee in 2026?

No, a W-2 employee can’t deduct home office rent for tax year 2026, regardless of the employer’s remote work policy. The Tax Cuts and Jobs Act suspended miscellaneous itemized deductions subject to the 2 percent floor under IRC section 67(g) starting in 2018, and the One Big Beautiful Bill Act, enacted July 4, 2025, made that termination permanent. The only relief is an employer reimbursement under an accountable plan, which is excluded from your wages rather than deducted.

Can I rent my own building to my business?

Yes, but three rules govern related-party rent: reasonableness, section 267(a)(2) timing, and self-rental recharacterization under Treasury Regulation section 1.469-2(f)(6). Rent has to match what you’d pay a stranger for the same property, defended with a broker opinion or appraisal dated when the lease was signed. If your operating company is accrual method and the landlord entity is cash method, section 267(a)(2) defers the deduction until the landlord reports the income. Net income from that rental is nonpassive, so it can’t absorb passive losses.

Is prepaid rent tax deductible?

Prepaid rent is deductible only for the period it covers, with one exception: the 12-month rule in Treasury Regulation section 1.263(a)-4(f). That rule lets a cash-method taxpayer deduct a payment when made if the benefit doesn’t extend beyond the earlier of 12 months or the end of the following tax year. Both prongs have to hold, so December rent covering next year usually qualifies and a five-year prepayment never does. Accrual-method payers still face economic performance under section 461(h).

Do I have to issue a 1099 to my landlord for rent?

You issue Form 1099-MISC for rent of $2,000 or more in calendar year 2026, up from the $600 threshold that applied for 2025. Rent paid to a real estate agent or property manager is reported by that agent, not by you, and payments to corporations are generally exempt. So a commercial landlord often needs no 1099 while a related-party lease to a member-managed LLC frequently does. Missing the filing doesn’t disallow the deduction, but it hands an examiner a reason to look harder.

Is business rent still deductible if my business had a loss?

Yes, business rent stays fully deductible in a loss year, because IRC section 162(a)(3) carries no profitability limit. Two related deductions do carry income caps. The home office deduction is limited to gross income from the business use of the home under section 280A(c)(5), with disallowed amounts carrying forward only under the regular method. Section 179 expensing on a tenant buildout is capped at taxable income under section 179(b)(3), so it can’t create a loss.