Can you expense your luxury hotel room? At first blush to the above question, your first response is “No.” After all, in order to be deductible, business expenses must be ordinary and necessary.
And what is ordinary and necessary? No one exactly knows for sure – but generally, ordinary can be thought of as something that is common and accepted in your trade or business and necessary is one that is helpful and appropriate to your trade or business. It does not need to be indispensable to be considered necessary, by the way. These are all fine nuances, which are not really defined.
Anyway, back to luxury hotel rooms. How would they be ordinary or necessary?
There is a tech start-up called DayUse.com. This website allows customers to rent a room for a few hours during the day for up to 75% less than a traditional booking. The hotels that have signed up can cover some additional costs of having empty rooms during the day, and the convenience for meetings is easy to understand – many of the hotels that have signed on are near airports.
However, some luxury hotels in places such as New York, London and Paris have also signed up with the company.
So, yes, in the right circumstances, it is possible that luxury hotel rooms can indeed be expensed. So, as in all things tax, the answer to “Can I expense my luxury hotel room?” is – “It depends.” It always depends on the specific facts and circumstances.
Donna H. Laubscher, CPA