Episode 47. Augusta Tax Strategy

The Augusta Tax Strategy lets S corporation owners pay themselves tax-free money from their business, completely legal under Section 280A of the tax code. In this podcast, I break down exactly how this powerful Augusta rule tax strategy works, the 5 critical rules you must follow, and how to implement it correctly so you stay on the right side of the IRS.

Here's the deal: If you rent your home to your business for 14 days or less per year for legitimate purposes like board meetings, strategic planning sessions, or client events, that rental income can be 100% tax-free to you personally. Meanwhile, your S corporation gets a full business deduction for the expense. This tax strategy for small business owners is a win-win when done right.

Most business owners have never heard of the Section 280A rental strategy, and their accountants aren't telling them about it. That's a missed opportunity for thousands in tax savings for S corporation owners every single year. If you're focused on tax planning for 2026, this is one deduction you can't afford to ignore.

In this podcast, you'll learn what the Augusta tax strategy is and where it comes from, how your S corporation can legally rent your home, the 14-day rule that makes this income tax-free, fair market value requirements for rental rates, documentation the IRS expects to see, why this doesn't work for sole proprietors, and real examples of how I use this strategy myself.

Whether you're exploring tax saving strategies for high income earners or just looking to reduce your S corporation taxes with smart tax planning strategies, the Augusta strategy is one of the most overlooked strategies available. 

🆓 Download FREE PDF: 7 Write-Offs Every S-Corporation Business Owner MUST Know: https://7taxwriteoffs.com/?el=podcast&htrafficsource=buzzsprout

*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, you are advised to consult with your attorney, accountant, tax preparer, and/or other advisor regarding your specific situation or your client’s specific situation. The information and all accompanying material are for your use and convenience only.

Chapters

• 0:00 The Big Tax-Free Promise
• 0:44 Show Intro And Credibility
• 1:18 What The Augusta Rule Is
• 1:51 How It Works Step By Step
• 3:22 Critical Rules And Documentation
• 5:24 Who It Works For And Warnings
• 6:03 Resources And Next Steps

Transcript

SPEAKER_01: 0:00

What if I told you that you can pay yourself$5,000 or$10,000 or even$20,000 from your business to your personal bank account, and that money would be completely tax-free. No income tax, no self-employment tax, no tax, no nothing. That's exactly what the Augusta strategy allows you to do. And it's 100% legal when you do it the correct way. I will keep this under five minutes. I'm going to explain exactly what this strategy looks like, how it works, and who can use it, and the critical rules that you need to follow to stay on the right side of the IRS to get a complete deduction. And most importantly, you will learn how you can use this tax strategy this year and get a nice big tax deduction. Ready? Let's dive in.

SPEAKER_00: 0:44

Welcome to the Tax Reduction Podcast for Money Making Entrepreneurs with Boris Musheev. Boris has helped entrepreneurs across the United States collectively save millions of dollars in taxes with the power of tax planning and advisory. The only way you, the business owner, can save money on taxes is by using proactive tax strategies. And this podcast is all about saving you money on taxes. Boris will share with you in-depth and easy-to-understand tax reduction strategies that you can implement in your business within 30 days or less. Let's jump into today's episode.

SPEAKER_01: 1:18

So, what is an Augusta tax strategy? The Augusta strategy comes from a section 280 of the tax code. It's named after Augusta, Georgia, where homeowners would rent their homes to people attending the Masters Golf Tournament. Here's the basic rule. If you rent your home 14 days or less during the year, you don't have to pay taxes on that rental income that you receive. It is completely tax-free. And here's the genius part your business can rent your home from you for a legitimate business purpose, pay you a fair market rent, take a tax deduction for that expense, and you pocket the money tax-free. Now, let's talk about how it works. Here's the practical example. Let's say you own an S corporation and you need a space to hold board meetings, strategic planning sessions, client meetings, or employee training events. Instead of renting a hotel conference room or office space, your company rents your home. Your business pays your home a daily rental rate. Let's say the fair market rate for renting a similar home in your area for a day is$1,500. Your company holds 10 business meetings at your home throughout the year. That's$15,000 your business pays to rent your home. From your business, that's a$15,000, a legitimate business expense. It's tax deductible. It reduces your company's taxable income. But for you personally, you received$15,000 in rental income. But because you rented your home for only 10 days, which is the under 14-day threshold, you don't pay any income tax on it. It's tax-free money in your pocket. Your business saves taxes by taking the deduction. You receive tax-free income. That's the Augusta tax strategy.

SPEAKER_00: 2:54

If you have a tax preparer and you do not have a tax advisor, the only way you can save money on taxes is by using proactive tax planning strategies that only a tax advisor can give you. Boris put together a free PDF for you, the business owner. 7 tax write-offs every S Corporation business owner must know. In this PDF, you can find seven tax strategies that you can start using in your business to instantly start saving money on taxes. Click on the link in the description below for a free download.

SPEAKER_01: 3:25

Now, of course there are rules you must follow, or the entire strategy falls apart. Rule number one, it must be for a legitimate business purpose. You can't just write yourself a check and call it a rental. You need to actually use your home for real business activities, board meetings, strategic planning sessions, client meetings, employee trainings, business events, and you need to document these. I just hosted a company holiday party at my house. I rented my whole house to my business for a company holiday dinner. We even had someone propose a dinner. Venues, not including catered food, to host about 30 people cost around$1,000 in my area. So I reimbursed myself$1,000 instead for using my home. You can do too when using it for legitimate business purpose. Rule number two, you can only do this for 14 days or less per year. Day 15 changes everything. Once you hit 15 days, all the rental income becomes taxable. So count carefully. Rule number three, you must charge fair market value rent. You can't charge$10,000 a day for a rental that would normally cost$500. Research what compatible properties in your area rent for. Document this, be reasonable, and reimburse yourself. Rule number four, document everything. Keep records of every meeting held at your home, who attended, what was discussed, what happened, how long it lasted, keep copies of rental agreement between your business and yourself. Keep documentation of the comparable rental rates. The IRS will want to see proof that this was a legitimate business expense. Rule number five: this works best for business entities like S corporations or C corporations. If you're a sole proprietor, this strategy does not work because you can't rent property to yourself. The Augusta Tax Strategy is a legitimate, powerful tax planning tool for business owners when used correctly. It allows you to move money from your business to yourself tax-free while your business gets a deduction. But the key phrase is when used correctly. Done wrong, this becomes an IRS problem you don't want to deal with. If you want to implement this strategy, talk to a qualified tax advisor who can help you set it up properly, document it correctly, and stay compliant. If you found this helpful, please subscribe. I create content specially for profitable business owners looking for legally reduce their tax burden.

SPEAKER_00: 5:51

That's it for today's episode. Be sure to check out the description below for some free tax reduction resources that Boris put together for you. If you're ready to work with a tax advisor on your tax planning, be sure to schedule your call by heading over to www.taxplanningcall.com. That's www.taxplanningcall.com. And be sure to subscribe to our podcast to be notified when the next strategy is released.