How Business Owners Use The Augusta Rule For Tax-free Income
The Augusta Rule, IRS Code § 280A, allows you to rent your home for up to 14 days without reporting the income on your taxes. In addition, your business can deduct the cost of renting the space as a business expense.
How can business owners use it?
Business owners may be able to rent their home to their business for meetings, but be sure to keep detailed records for the IRS and charge a competitive rate based on the current local rental market.
Do you have monthly board meetings? Or maybe you want to have an IRL meeting for all the WFH employees? You can rent out a separate space in your home, that is not your dedicated home office, based on the local market rates for what it would cost to host your shindig.
Considerations:
Can only be rented for 14 days or less per year
Must have a legitimate business reason for renting the space
The space must be different than the dedicated home office space
You cannot deduct expenses from hosting these meetings, like catering
You must keep detailed meeting minutes about the business that was conducted, and details on how you calculated the rental rate
Are you a business owner that is interested in learning more tax savings strategies?
If so, click Book A Meeting.
