Determine the use of the house. For real estate to be a legitimate business expense, it must serve a business need. For instance, a hair stylist could buy a house and use it as her salon, cutting her client's hair in the house and hanging a sign outside. She could not, however, buy two houses, use one for her salon while living in the other, and claim the second house as a business expense.
Use a portion of the house for business. If the majority of the home is in use for business purposes, you may be able to live in the additional portion and claim part of the house as a business expense. The problem with doing this, however, is that you may lose your living quarters if you suffer a business loss, since the business portion of your home is now an unprotected asset.
Buy a house through your business if you have a corporation but lose your personal protection. A corporation exists to separate business expenses from personal expenses, and it will protect your personal expenses if your business incurs debt that you can't pay. All assets you hold in your corporation are subject to seizure and liquidation in order to pay creditors, so the house would fall into that category.
Request that the closing agent for the transaction list your business name as the owner of the house on the title deed. In some states, this means your business name must be on record as a fictitious name through the state. In others, you may simply request that your business name be on the deed. Talk to the closing agent and your mortgage lender to find out the restrictions on placing the home's title in your business' name.
Keep detailed records of all incurred expenses associated with your purchase of the house. The IRS requires that you list and provide evidence for all business purchases, since your accountant will weigh them against your gross business sales or receipts in order to figure your tax liability. Since a house is a big purchase, you may spread out the deduction over a number of years.
Prepare to pay capital gains tax when you resell the house. A house used as a personal residence is exempt from capital gains taxes, up to a certain amount; however, profit you realize on a house purchased as a business expense is taxable.