Do you like to golf? Well, you are about to!
The Augusta Strategy, which is based on the most prestigious golf tournament of the year, can help save you thousands in taxes!
How? By simply renting your home. No sand traps required!
Now, let’s dig into what the Augusta Strategy is and how it can be applied to your business.
What is the Augusta Tax Strategy?
You can rent out your home to your business (or other purposes like Airbnb) for up to a total of 14 days each year. Your home can be located anywhere in the United States and the income from the rental is excluded from your taxable income.
To establish a reasonable rental price you need to document local pricing standards. Contact at least three local establishments where business would normally have meetings, such as country clubs or hotels, to get an idea of venue costs in your area.
You can use your home for a variety of business purposes, including planning sessions and even company parties. It’s recommended that you schedule your meetings in your calendar system and send out an agenda if possible.
There is no minimum participant requirement, but keep in mind:
- The daily rental rate doesn’t include the cot of business meals.
- The home can’t be considered a full-time rental property.
- If you rent out your home for more than 14 days, you’ll have to report all the income and won’t get the tax benefit.
Requirements of the Augusta Tax Strategy
The requirements while simple, are very important to remaining compliant.
- A written rental agreement.
- Thorough documentation supporting the rental price.
- Meeting documentation such as meeting minutes and notes.
- The business entity structure must be an S corporation, C corporation, or partnership. It can’t be a Schedule C (self-employment income), unless the entity is a Single Member LLC.
Internal Revenue Code sections and related regulations include PLR 8104117; IRC Section 280A; IRC Section 274(a)(1)(B);IRC Section 267(a)(2); IRC Section 262; IRC Section 162; Gregory v Helvering, 293 U.S. 465 (1935); Frank Lyon Co. v United States, 435 U.S. 561, 573 (1978); Rev. Rul. 76-287; Leslie A. Roy v Commr., TC Memo 1998-125 PLR 8104117