My wife and I live on a 40 acre piece of Tennessee mountain that was once plated for a subdivision. Our piece is undeveloped aside from the model home in which we live and a substantial shop building where we maintain vehicles, weld, woodwork and such.
We have been thinking about doing some development and turning this into a speciality airb&b resort. We have bought some equipment, including a crawler mounted loader/backhoe, four wheel drive trucks and a four wheeler. If we include the trucks, we probably have invested 100k into equipment. This does not include shop tools and maintenance equipment.
What we are investigating is forming a LLC to develop the property, putting our day job income into the LLC, have the LLC pay for all property related costs, aside from the rent we would pay to live on the property.
This would result in the only income that would be taxed is the pass through "profit" that we would take for personal expenses, like off-duty clothing, and personal use of the corporate vehicles. Clothes for a "day jobs" and transporation to our day jobs would be corporate expenses, since we would be full time, 24/7 employees of the corporation with all the income derived from the day jobs going into the corporation.
Our taxable income last year was in excess of 350k from our day jobs and we are actively buying additional property and doing basic infrastructure work to include drainage, maintenance of roughly 3 miles of internal timber roads/fire breaks and forest management activities.
My question, is this a valid idea to save money on taxes?