Mixed Use Building Corp/Business

Client lives on a farm/acreage and is building a shop on his personal property. This shop is used by his corporation as well as personally. Client initially wanted to expense 50% of cost of building to which I have said, no that is not acceptable in the case of a capital property/new building.
He then asked about capitalizing a portion of the cost of building under the corporation (which I guess would be considered a leasehold improvement, since the corporation has no ownership/title to the building).
Normally, I would treat the corporate use as a minimal/reasonable rental expense (basically a breakeven rental amount) to the corporation especially considering that the shop use would be about 35%.
I am wondering what other practitioners do in this circumstance.

I would charge fair market value rental to the corporation for the portion of the shop that the corporation uses. I would set rental rate to include hydro, heat, and property tax as well as a reasonable amount for building maintenance. I would probably set the rental rate on the high end of market value to pass cost on to corporation and income to the farm business.

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Thank you for your quick response. I am then assuming you would be following through and that the rental income would then be reported on the client’s T1 with applicable expenses pertaining to the rental portion.

Yes, I report rental income and expense on his personal T1.

I would do the same as obhorst.