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The Augusta Rule: Rent Out Your Home for Tax-Free Income

The Augusta Rule is a fantastic tax loophole for business owners, offering substantial tax benefits.

How It Works

Your business can rent your home for work events for up to 14 days a year. This income is tax-free, and your business gets a tax deduction.

What is the Augusta Rule?

The Augusta Rule, or Section 280A, allows you to rent out your home for 14 days a year without paying taxes on the income. It originated in Augusta, Georgia, to benefit residents during the Masters golf tournament.

Benefits for Business Owners

Any homeowner can rent their home tax-free for up to 14 days, but business owners can benefit even more. By renting their home to their own business for events or meetings, they enjoy tax-free income and a business tax deduction.

Rules to Follow

1. Primary Residence: The home must be your primary residence.

2. 14-Day Limit: The tax-free rental period is limited to 14 days per year.

3. Reasonable Rental Rate: The rental rate must be fair and consistent with local prices.

4. Business Structure: Your business must be an LLC, s-corp, c-corp, or partnership.

How to Claim the Augusta Rule

1. Check Eligibility: Ensure your home is your primary residence and your business is properly structured.

2. Set a Fair Price: Charge a reasonable rental rate and document your pricing method.

3. Document Events: Keep records of the business purpose, agenda, and attendees.

4. Create an Invoice: Bill your business for the rental.

5. Pay by Check: Make payments via check for a clear paper trail.

The Augusta Rule is a valuable tool for homeowners and business owners, allowing tax-free rental income and business expense deductions. Ensure your business is structured correctly and follow the documentation rules to maximize your benefits.

What’s Happening at Carry?

Here’s what you can expect in the coming weeks

See the full list of events here. ⏰

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If you want more resources on building wealth as a solopreneur/entrepreneur, check these out:

• The Solo 401k handbook 

• The Roth IRA handbook 

• The Self-Directed IRA handbook 

• The Guide to Paying Less in Taxes

• What is a Solo 401k?

• How to Open a Solo 401k