In honor of The Masters golf tournament this week, here is a tax tip that can save you a couple of strokes off your tax bill. It's the good old "Augusta Rule" (Section 280A(g) of the Internal Revenue Code) in honor of the residents of Augusta, Georgia who rent their homes to spectators visiting The Masters.
Great thing is you don't have to be in Augusta to take part in this tax break. You’ll also see residents of Super Bowl host cities, political convention sites, music festivals, and Olympic Games host cities take advantage of the rule. And many taxpayers who live in less exotic locations take advantage of the opportunity to rent out their vacation homes when they would otherwise sit empty.
However, this rule also opens the door to renting your home to your business, paying a reasonable deductible rent out of the business account, and then treating it as non-taxable income when it hits your personal account. You can rent your home for all sorts of purposes, including business meetings, employee events, and even a limited amount of employee entertainment.
The key to making this work is to document your bona fide use of the home, and show that the rent you charge is reasonable. Need help feel free to contact us.