5 Tax Tips for Business Owners- Tip 2- Use the Augusta Rule

In this discussion with Matt Blocki from EWA, five tax tips for business owners are shared. The second tip is the “Augusta Rule,” allowing business owners to rent their homes for up to 14 days without reporting it as taxable income. This can lead to significant tax savings, especially for those in higher tax brackets. Additionally, renting to your own company for meetings is permitted as long as it’s properly documented. These tips offer ways for business owners to be more tax-efficient.In this discussion with Matt Blocki from EWA, five tax tips for business owners are shared. The second tip is the “Augusta Rule,” allowing business owners to rent their homes for up to 14 days without reporting it as taxable income. This can lead to significant tax savings, especially for those in higher tax brackets. Additionally, renting to your own company for meetings is permitted as long as it’s properly documented. These tips offer ways for business owners to be more tax-efficient.

Video Transcript

Hi, Matt Blocki with EWA. Today we are talking about five tax tips if you’re a business owner. So, as a business owner, I’m sure you’re aware you pay your fair share in taxes. And as a business owner, there are ways to be as tax efficient as possible.

So we’re going to be talking about some common tips and tactics and then also some things that you may have not heard about. The second out of the ordinary tip for a business owner is what’s referred to as the Augusta Rule.

So the Augusta rule was created because of the golf tournament down in Augusta, and people would rent their houses out. So as far as reporting income, the government now allows a business owner to rent their house out for up to 14 days without reporting it as a taxable event.

So, just hypothetically, you have to look at the market rate for a day’s rent. If your house is worth $500,000 a day’s, rent may be 1%. So $500. So if you rent your house out for 14 days, $500, that’s a $7,000 hit with no taxes.

If you’re otherwise subject to the highest tax bracket, there’d be over $2,000 of tax savings there. And you can rent your house out to your own company for board meetings or for monthly meetings with your team.

As long as it’s documented that you’re doing the work and holding team meetings there, this is allowed. So just an easy way to save up to that 14 days. Obviously, the higher the value, the higher that comparable market rent would be would mean to the higher tax savings of this role.

These are our five tips for tax planning. Please reach out if you have any questions.

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Playlist

5 Tax Tips for Business Owners

5 Tax Tips for Business Owners- Tip 1- Section 179 - Accelerated Write Off for Vehicle
5 Tax Tips for Business Owners- Tip 3- Use S Corp Election to Lower Salary
5 Tax Tips for Business Owners- Tip 4- Hire Your Children
5 Tax Tips for Business Owners- Tip 5- Implement a 401k and Cash Balance Plan

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