Two of my companies share an office. Which one deducts the rent?
The lease, use of space and payment arrangement should tell a consistent story.
By AE Tax Advisors Team · Updated October 28, 2026
The lease, use of space and payment arrangement should tell a consistent story. Determine whether one entity is a tenant supplying space to another, or whether both have obligations directly to the landlord.
A business-owner scenario
A professional owns a design company and a training company. Design signs the lease and pays all rent, while training uses a classroom most weekdays. A reasonable review separates dedicated rooms, shared space and services rather than assuming the leaseholder bears every cost.
Illustrative scenario, not a client result.
Work through the transaction
- Read occupancy and subletting provisions with counsel.
- Document actual use and a supportable charge.
- Reconcile rent payments, reimbursements and intercompany balances.
The mistake that changes the result
Moving half the rent by journal entry does not establish a permitted sublease or explain the services included in the charge.
Records that resolve the question
- Lease and amendments.
- Floor plan.
- Occupancy schedule.
- Payment and reimbursement records.
The decision to document
Request an operating arrangement that matches the lease and books. If the landlord must consent, resolve that legal step before relying on an internal billing schedule.
Which fact changes the answer?
Dedicated classrooms, storage and desks can be measured separately from common areas. If one company also supplies reception or equipment, identify those services rather than treating the whole charge as rent. That detail helps the legal and tax reviews agree.
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Related owner questions
- Should every new product line have its own LLC for taxes?
- Company A bought equipment that Company B uses. Who depreciates it?
Sources and scope
General educational information prepared with AI assistance. No individual professional review is represented. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.