There’s a section of the tax code named after a golf tournament, and it could save you thousands. Ticker Tape talks about the Augusta Rule with its investors all the time. Under Internal Revenue Code Section 280A, a homeowner can rent their residence to their own business, or to any business, for a limited number of days a year, and that income isn’t taxed.
The business pays rent to the individual and takes a tax deduction for the rent paid. The homeowner reports the money received as tax-free. There are restrictions, so talk to your CPA before using this strategy.
Key points
- The Augusta Rule is Internal Revenue Code Section 280A.
- A homeowner can rent their residence to a business for a limited number of days each year.
- The business deducts the rent, and the homeowner receives it tax-free.
- There are restrictions, so check with your CPA.
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