How can a business utilize the “14-day home rental rule” and get the most out of their business deductions while still taking advantage of tax-free income? In this episode of the Small Business Tax Savings Podcast, Mike discusses the 14-day home rental rule, which allows business owners to shift taxable business income to tax-free personal income by renting out their home for 14 days or less in a calendar year. He explores how this strategy can be beneficial for businesses that need to host events and meetings for employees and clients, as it allows them to deduct the rental rate from their tax return.
Mike covers the details of how to make use of this tax code, including the need to document rental activity, setting a reasonable rental rate, and issuing 1099s if payments exceed #600.
Tune in now and listen as Mike shares how to utilize this strategy and get the most out of their business deductions while still taking advantage of tax-free income!
[00:24] Discover How The Augusta Rule Can Help You Shift Your Business
- Today’s topic is, “Your Guide to 14-Day Tax-Free Home Rentals”
- Mike discusses how this rule allows one to potentially shift taxable business income to tax-free personal income
[04:40] Take Advantage Of The 14-Daay Home Rental Rule
- Business must be a separate legal entity to take advantage of this strategy
- Need to have a valid business reason for rental
- Home office deduction can still be taken on top of the 14-day home rental
- Determine a reasonable rental rate and have backup proof
[08:34] Utilize The 14-Day Home Rental Rule For Tax Deductions
- Have a lease agreement to button up the strategy
- Make a payment from a business account to the personal account
- Process 1099 from business to personal and zero it out on personal tax return
- Utilizing the 14-day home rental rule can be used as a tax deduction
[14:09] Closing Segment
- Mike shares how to utilize the Augusta Rule!
- Final Words
Key Quotes
“If you want to take advantage of this strategy, there are a few things that you need to know, you need to file, you need to be thinking about. You need to have a valid business reason. It must be 14 days or less in total for the year. And it must be a personal residence.” – Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
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